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Gary J. Young

Northeastern University | USA

Title: The effect of vertical integration on operational performance: Evaluating physician employment in hospitals

Biography

Biography: Gary J. Young

Abstract

This study investigated whether vertical integration of hospitals and physicians is associated with better care for patients with cardiac conditions.  A dramatic change in the U.S. hospital industry is the integration of hospital and physicians through hospital acquisition of physician practices. Yet, there is little evidence regarding whether this form of vertical integration leads to better operational performance of hospitals.  The study was conducted as an observational investigation based on a pooled, cross-sectional database.  The study sample comprised over 300 hospitals in the State of California. The time frame for the study was 2010 to 2012.  The key performance measure was hospitals’ degree of compliance with performance criteria set out by the federal government for managing patients with cardiac conditions.   These criteria relate to the types of clinical tests and medications that hospitals should follow for cardiac patients but hospital compliance requires require the cooperation of a hospital’s physicians.   Data for this measure was obtained from a federal web site that presents performance scores for U.S. hospitals.  The key independent variable was the percentage of cardiologists that a hospital employs (versus cardiologists who are affiliated but not employed by the hospital). Data for this measure was obtained from the State of California which requires hospitals to report financial and operation data each year including numbers of employed physicians.  Other characteristics of hospitals (e.g., information technology for cardiac care, volume of cardiac patients) were also evaluated as possible complements or substitutes for physician employment by hospitals.  Additional sources of data included the American Hospital Association and the U.S. Census.  Empirical models were estimated with generalized estimating equations (GEE).  Findings suggest that physician employment is positively associated with better hospital performance for cardiac care.  However, findings also suggest that information technology is a substitute for physician employment.    

Recent Publications

  1. Alexander, J.A. & Young, G.J. 2016. Health Professionals and Organizations – Moving toward True Symbiosis. In Hoff, T.J., Sutcliffe, K.M, & Young, G.J. (Eds.), The HealthCare Professional Workforce: Understanding Human Capital in a Changing Industry. New York, New York:  Oxford University Press.
  2. Baker, L.C., Bundorf, M. K., & Kessler, D.P., 2014. Vertical integration: Hospital ownership of physician practices is associated with higher prices and spending. Health Affairs, 33(5): 756-763.
  3. Forbes, S.J. & Lederman, M., 2009. Adaptation and vertical integration in the airline industry. The American Economic Review, 99(5): 1831-1849.
  4. Friedberg, M.W., Chen, P.G., White, C., Jung, O., Raaen, L., Hirschman, S., Hach, E., Stevens, C., Ginsburg, P.B., Casalino, L.P., Tutty, M., Vargo, C., Lipinski, L.  2015. Effects of Health Care Payment Models on Physician Practice in the United States. Santa Monica, CA: RAND Corporation.
  5. Young, G. J., Nyaga, G. N., & Zepeda, D., 2016. Hospital employment of physicians and supply chain performance: An empirical investigation. Health Care Management Review, 41(3): 244-255.