Does Hospital–Physician Integration Improve Hospital Performance? Results from a USA Longitudinal Study

In a dynamic healthcare industry, aligning the goals and objectives of hospitals and physicians through integration has been suggested to influence performance. Physicians’ leadership and active involvement in governance can direct resource usage, Electronic Health Record (EHR) implementation, price negotiation, better coordination, and continuity of services for patients, thus affecting performance. This study aimed to examine the relationship between physician integration and hospital performance, investigating both financial and quality outcomes. We used a longitudinal study design. Our sample was hospital-level data from 2014 to 2019, which contained 6000 U.S. hospital-year observations. The dependent variables were quality outcomes (readmission rates) and financial outcomes (total and operating margins). The independent variable explored three dimensions of integration: high, low, and overall integration. Findings showed no impact of hospital–physician integration on quality outcomes and financial performance. High-integration hospitals did not show any significant relationships with quality outcomes and financial performance compared to hospitals that did not have high integration. Hospital–physician integration may have little potential to bring clinical integration even though vertical integration is present. A commitment to improving quality as a strategic priority may be vital in impacting quality outcomes, followed by financial performance.