Study Looks at Factors Driving Health Care Costs

Markets that are less consolidated or less aligned vertically tend to have higher costs, while markets with well-organized provider networks tend to have lower costs, according to a new study by the Healthcare Financial Management Association, Leavitt Partners and McManis Consulting of the factors influencing the total cost of care in U.S. health care markets. The study looked at the correlation between total health care costs and cost growth and factors such as the penetration of value-based payment models, provider and health plan concentration, percentage of physicians in primary care and specialty practices, and population health status. Physicians in lower-cost markets were typically employed by or closely aligned with the health systems, and the market usually included at least one integrated delivery system with a health plan, a hospital and clinician capabilities, the study found. "This research is a valuable addition to the debate about the impact of consolidation on total cost of care," said HFMA President and CEO Joseph Fifer. The study found no correlation between population-based VBP models and total cost of care during the study period (2012-2014), when participation in the Medicare Shared Savings Program was just beginning.