Expectations Outpace Reality: Physicians' Use of Care Management Tools for Patients with Chronic Conditions

Originally published by the Center for Studying Health System Change (HSC), a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

Tracking Trends in Health System Change

This HSC Issue Brief No. 129 examined ongoing changes in the health care delivery system across the 12 nationally representative communities studied through the Community Tracking Study. Published during a period of significant transformation in how health care was organized, financed, and delivered in the United States, the brief tracked key trends including consolidation among hospitals and physician groups, shifts in insurance market dynamics, and the growing role of information technology in health care delivery.

Hospital Consolidation and Market Power

Across the study communities, hospital consolidation continued to reshape local markets. Mergers and acquisitions reduced the number of independent hospitals in most areas, creating larger systems with greater bargaining leverage over health plans and other payers. In several markets, dominant hospital systems had achieved sufficient market concentration to negotiate substantially higher reimbursement rates, contributing to the overall growth in health care spending.

The consolidation trend was driven by multiple factors. Hospitals sought economies of scale in purchasing, administration, and clinical operations. Smaller hospitals facing financial pressure viewed merger with a larger system as a path to survival. And as health reform discussions intensified, many hospitals believed that larger, more integrated organizations would be better positioned to succeed under new payment models that rewarded coordination and efficiency over volume.

Physician Practice Changes

Physician practice patterns were also evolving substantially. The traditional model of independent practice was giving way to larger group structures and hospital employment. Rising administrative burdens, including electronic health record requirements and quality reporting mandates, made independent practice increasingly difficult for small groups. Many physicians, particularly younger ones entering the workforce, preferred the financial stability and predictable work hours of employment over the risks and responsibilities of practice ownership.

The shift toward hospital employment of physicians raised concerns about its effect on health care costs. Hospital-employed physicians could bill for facility fees in addition to professional fees, increasing the total cost of services that would have been less expensive in an office setting. Some health plans and employers pushed back against this practice, arguing that the same clinical service should not cost more simply because the physician's employer had changed from a private practice to a hospital system.

Insurance Market Dynamics

Health insurance markets across the study communities showed increasing concentration, with fewer carriers competing for employer and individual business. In some markets, a single insurer held dominant market share, giving it significant leverage over providers. In others, multiple carriers competed aggressively on price and network configuration. The interaction between insurer and provider market power was central to determining local health care costs and the premiums that employers and consumers paid.

Employers continued to shift costs to workers through higher deductibles, copayments, and premium contributions. High-deductible health plans paired with health savings accounts were gaining ground, particularly among larger employers, though enrollment remained modest relative to traditional plan designs. The trend toward greater consumer cost-sharing showed no signs of reversing, as employers struggled with premium growth that consistently outpaced inflation and wage increases.

Technology Adoption and Quality Improvement

Adoption of electronic health records and other health information technology accelerated across the study communities during the tracking period. Federal incentive payments through the HITECH Act spurred investment, though implementation challenges remained significant. Larger organizations with greater capital resources moved more quickly than smaller practices and rural providers, creating a digital divide in health care that had implications for care quality and coordination.

Quality improvement initiatives gained traction, particularly around hospital-acquired infection prevention, readmission reduction, and chronic disease management. Both regulatory mandates and financial incentives tied to performance measures drove these efforts. However, the proliferation of different quality metrics and reporting requirements created an administrative burden that providers found increasingly difficult to manage, even as the underlying goal of improving care delivery enjoyed broad support.

Policy Implications

The research highlighted an ongoing tension between the potential benefits of provider consolidation, including efficiency gains and improved care coordination, and the competitive risks it posed, including higher prices and reduced consumer choice. Policymakers faced the challenge of encouraging integration and coordination while maintaining the competitive market structures that gave purchasers and patients meaningful alternatives. The findings from these 12 communities provided ground-level evidence of how national trends in health care organization and financing played out differently depending on local market conditions, provider configurations, and state regulatory environments.

Sources and Further Reading

Centers for Medicare and Medicaid Services — Federal health programs administration.

Health Affairs — Peer-reviewed health policy journal.

Robert Wood Johnson Foundation — Health policy research philanthropy.