Medical Group Characteristics and the Cost and Quality of Care for Medicare Beneficiaries

Objective To estimate the relationship between outcomes of care and medical practices’ structure and use of organized care improvement processes. Data Sources/Study Setting We linked Medicare claims data to our national survey of physician practices (2012–2013). Fifty percent response rate; 1,040 responding practices; 31,888 physicians; 868,213 attributed Medicare beneficiaries. Study Design Cross‐sectional observational analysis of the relationship between practice characteristics and total spending, readmissions, and ambulatory care–sensitive admissions ( ACSA s), for all beneficiaries and five categories of beneficiary defined by predicted need for care. Principal Findings Practices with 100+ physicians and 50–99 physicians had, respectively, annual spending per high‐need beneficiary that was $1,870 (12.5 percent) and $1,824 higher than practices with 1–2 physicians, and readmission rates 1.64 and 1.71 higher. ACSA rates did not vary significantly by practice size. Outcomes did not vary significantly by ownership or by practices’ use of organized processes to improve care. Conclusions Large practices had higher spending and readmission rates than the smallest practices, especially for high‐need beneficiaries. There were no significant performance differences between physician‐owned and hospital‐owned practices. Policy makers should consider the effects of specific policies on provider organization, pending further research to learn which types of practice provide better care.