Original Article

OPEN: Expenditures and Quality: Hospital- and Health System–Affiliated Versus Independent Physicians in Virginia

Authors: Louis F. Rossiter PhD


Objectives: The American Medical Association has reported that 2016 was the first year in which fewer than half (47.1%) of all practicing physicians owned their own practice. Across the United States, there has been consolidation of physicians and hospital and health systems, resulting in questions about the effect of this on healthcare expenditures. The aim of this study was to compare the expenditures per patient between hospital- and health system–affiliated physicians and independent physicians.

Methods: The author used Virginia’s new statewide all-payer claims database to analyze expenditures and quality for 3 years for hospital- and health system–affiliated physicians versus independent physicians. The database had all claims statewide for Virginians with individual or group commercial insurance coverage: 1.95 million patients in 2013, 2 million in 2014, and 2.1 million in 2015. The average annual expenditure for each physician was adjusted for average patient condition burden (risk) and differences in geographic input costs using regression analysis. Measures of primary care quality were obtained from the claims data using evidence-based measures from national health quality organizations.

Results: Hospital- and health system–affiliated physicians had annual expenditures per patient ranging from 10.3% to 14.6% higher than independent physicians. Most of the measures of primary care quality were not significantly different.

Conclusions: Virginia patients, employers, and managed care companies incurred higher per-patient expenditures with hospital and health system physicians than with independent physicians.

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Table 1. Adjusted annual expenditures differences per patient by hospital and health system physicians and independent physicians, 2013–2015

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Table 2. EBMs of quality primary care for hospital and health system physicians and independent physicians, 2013–2015

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