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Hospital–Physician Affiliations and Patient Treatments, Expenditures, and Outcomes


  • Kristin Madison

  • This research was supported by a National Science Foundation graduate fellowship, a Health Care Financing Administration dissertation fellowship grant, and a 2001 academic year research fellowship sponsored by the John M. Olin Program in Law and Economics at Stanford Law School. Any opinions, findings, conclusions, or recommendations expressed in this article are those of the author and do not necessarily reflect the views of the National Science Foundation or the Centers for Medicare and Medicaid Services.

    Address correspondence to Kristin Madison, J.D., Ph.D., Assistant Professor, University of Pennsylvania Law School, 3400 Chestnut St., Philadelphia, PA 19104. Dr. Madison is also a Senior Fellow, Leonard Davis Institute of Health Economics.


Objective. To determine the relationship between hospital–physician affiliations and the treatments, expenditures, and outcomes of patients.

Data Sources. Sources include the Medicare Provider Analysis and Review dataset, the American Hospital Association (AHA) Annual Survey, and the Area Resource File (ARF).

Study Design. A multivariate regression analysis of the relationship between hospital–physician affiliations (such as physician–hospital organizations [PHOs] or salaried employment) and the treatment of Medicare patients with a diagnosis of acute myocardial infarction admitted to general medical-surgical hospitals between 1994 and 1998. Dependent variables include whether the patient received a catheterization or angioplasty or bypass surgery; whether a patient was readmitted, or died within 90 days of initial admission; and expenditures. Independent variables include patient, admission hospital, and market characteristics, as well as hospital and year fixed effects.

Principal Findings. The integrated salary model form of hospital–physician affiliation is associated with slightly higher procedure rates, and higher patient expenditures. At the same time, there is little evidence that hospital–physician affiliations in the aggregate have had any measurable impact on patient treatment or outcomes.

Conclusions. The limited effect of hospital–physician affiliations on patient outcomes is consistent with previous research showing that affiliations have not much changed the nature of health care delivery. However, the finding that the integrated salary model is associated with higher treatment intensity suggests that affiliations may have had some impact on patients, and could have more in the future.

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