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What's in a System? The Uncertain Meaning of Health System Affiliation in Surgery

Mavroudis, Catherine L. MD; Tong, Jason MD; Kelz, Rachel R. MD, MSCE, MBA

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doi: 10.1097/SLA.0000000000004699
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The cost of surgical care is a substantial part of the rising costs of healthcare in the United States: an operation performed in this country costs 1 to 1.5 times more than that in other countries. The total cost of surgical care in the United States constitutes approximately half of inpatient costs, though only a third of inpatient volume.1–3 This multifactorial problem may be in part due to the pseudo-competitive market for healthcare delivery in the United States, in which the supply and demand curves are distorted by regionalization and payer mix. In response to these pressures, health system formation has increased dramatically in the past decade4 with an unclear impact on surgical value.

To date, the true effect of health system formation remains undetermined. Proponents have suggested that health systems are able to spread evidence-based protocols and quality improvement initiatives across all hospitals within a given system. This would further improve both outcomes and efficiency through financial and intellectual economies of scale, and thereby improve value.5 Opponents have raised concerns that system expansion poses risks to patient safety due to inadequately supported changes in infrastructure, staffing, and patient population.6

In practice, not all health systems provide an equal opportunity to improve the value of surgical care. At one extreme, a large, geographically disparate system with hospitals scattered across the country may be able to realize the financial benefits of large-scale supply-chain sourcing, but is unlikely to be able to concentrate complex surgical volume in order for patients to realize potential clinical benefits of operating at scale. On the other hand, a smaller network of hospitals within a single region may be well-suited towards building a hub-and-spoke operative referral network, with resources concentrated on bringing patients to the best surgical infrastructure in one central hospital. Unfortunately, it is also more likely to have the advantage in contract negotiations with payers, thus driving up the cost of care and potentially limiting access for patients due to payer mix. Until we have a clear understanding of what it means to be a health system, we will not be able to evaluate the value of health system formation in surgery.

To demonstrate the wide variation in system structure, we present the following case series of health systems in the United States. Using the American Hospital Association (AHA) annual survey dataset,7 we identified 413 systems that contained at least one surgical hospital, defined for this purpose as a hospital with at least 3 operating rooms. We generated multiple random two-percent samples. In studying both hospital and system characteristics, we found few similarities across systems, resulting in significant differences across samples. Two such samples can be seen in Table 1. In the first, we see that system size ranged from two to 27 hospitals. Six out of 7 health systems were in one state, while one 27-hospital system was spread across 14 states. Five systems contained hospitals of at least two different bed-size categories (eg, small and medium), while two contained only small hospitals. Three systems had at least one hospital that was a designated trauma center; five had at least one academic medical center. Four health systems were defined as “independent” system clusters by the AHA, which are “largely horizontal affiliations of autonomous hospitals,” while three were “centralized,” with centrally organized hospital services, physician arrangements, and insurance products.7 The second sample highlights the individuality of each system. These random samples of health systems demonstrate wide variation across the characteristics studied, with more observed differences than discernable similarities.

TABLE 1 - A Case Series of Health System Characteristics Among 2 Random Samples of Health Systems in the United States
Sample 1
System ID A B C D E F G H
No. of hospitals 4 6 27 6 2 2 2 7
No. of states in system 1 1 14 1 1 1 1 1
Bed size category
 Small (<100 beds) 1 0 25 5 0 2 2 5
 Medium (100–299 beds) 2 3 2 1 1 0 0 2
 Large (≥300 beds) 1 3 0 0 1 0 0 0
No. of trauma center hospitals 0 2 0 0 1 0 0 4
No. of academic medical center hospitals 3 4 2 0 2 0 0 2
System cluster Ind. Cent. Ind. Ind. Cent. Unk. Ind. Cent.
Sample 2
System ID I C J K L M N O
No. of hospitals 104 27 2 6 2 73 2 32
No. of states in system 16 14 2 1 1 18 1 4
Bed size category
 Small (<100 beds) 56 25 2 4 1 29 2 26
 Medium (100–299 beds) 25 2 0 1 1 22 0 5
 Large (≥300 beds) 23 0 0 1 0 22 0 1
No. of trauma center hospitals 45 0 0 0 1 32 2 14
No. of academic medical center hospitals 40 2 0 0 0 35 1 3
System cluster Dec. Ind. Unk. Ind. Ind. Dec. Ind. Dec.
(1) System Clusters: Ind., Independent, Cent., Centralized, Dec., Decentralized, Unk. = Unknown/Missing.(2) Due to random chance, system C was included in both samples.

Our findings suggest that system designation does not confer information about hospital structure or the role of each hospital within the system. The heterogeneity of health system structure implies substantial differences in the organization of healthcare delivery across systems. The structure of health systems must be better characterized before their value—or lack thereof—can be determined. In order to do this, as a health services research community, we must develop a cohesive scientific taxonomy analogous to that which exists for cell biology—understanding each organelle, its role within the cell, and that cell's role in maintaining the vitality of a larger organism. The interactions between patients, hospitals, and health systems are no less complex, and the ramifications for the future of our health system are significant. Delineating the characteristics of health systems that confer optimal conditions for high-value care will enable the construction of health systems that maximize the value of healthcare for the patient, payer, and provider. Systems must be accountable to their outcomes to deliver on the promise of improved healthcare delivery, as they enjoy financial privileges associated with the business relationships between entities. Although our examples are focused on surgery and in-hospital care, these principles can be applied across the breadth of medicine. By doing so, we may be able to see substantial gains in the value of care delivery across the United States.


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health system; healthcare costs; quality; surgery; value

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