title: Evaluating The Role Of Payment Policy In Driving Vertical Integration In The Oncology Market.
abstract: The health care industry has experienced massive consolidation over the past decade. Much of the consolidation has been vertical (with hospitals acquiring physician practices) instead of horizontal (with physician practices or hospitals merging with similar entities). We documented the increase in vertical integration in the market for cancer care in the period 2003-15, finding that the rate of hospital or health system ownership of practices doubled from about 30 percent to about 60 percent. The two most commonly cited explanations for this consolidation are a 2005 Medicare Part B payment reform that dramatically reduced reimbursement for chemotherapy drugs, and the expansion of hospital eligibility for the 340B Drug Discount Program under the Affordable Care Act (ACA). To evaluate the evidence for these explanations, we used difference-in-differences methods to assess whether consolidation increased more in areas with greater exposure to each policy than in areas with less exposure. We found little evidence that either policy contributed to vertical integration. Rather, increased consolidation in the market for cancer care may be part of a broader post-ACA trend toward integrated health care systems.
authors.affiliation: Abby Alpert is an assistant professor of health care management at the Wharton School, University of Pennsylvania, in Philadelphia.
authors.forename: Abby
authors.initials: A
authors.lastname: Alpert
authors.affiliation: Helen Hsi was an analyst at the Health Policy Research Institute at the University of California, Irvine, when the analysis was conducted.
authors.forename: Helen
authors.initials: H
authors.lastname: Hsi
authors.affiliation: Mireille Jacobson (mireille@uci.edu) is an associate professor of economics and public policy at the Paul Merage School of Business, University of California, Irvine.
authors.forename: Mireille
authors.initials: M
authors.lastname: Jacobson
mesh_terms: D005102:Health Expenditures; D006761:Hospitals; D006801:Humans; D008495:Medical Oncology; D016345:Medicare Part B / Q000639:trends; D010067:Ownership; D058991:Patient Protection and Affordable Care Act / Q000639:trends; D010820:Physicians; D011445:Prospective Payment System; D012051:Reimbursement Mechanisms / Q000639:trends*; D014481:United States
keywords: Consolidation; oncology