Structure of the healthcare system

Healthcare System Basics

Connecticut’s health system, like the rest of the US, is fragmented and not well-organized. Care varies between primary, preventive care and more intensive specialty care, as well as between integrated, consolidated systems and independent providers. This fragmentation increases costs and poses a challenge to good patient care. Initiatives like Patient-Centered Medical Homes and Accountable Care Organizations are attempting to change that by coordinating the care provided to individual patients.

There is no evidence that increasing spending on primary care will lower overall costs. Primary care capacity in Connecticut is better than most of the US; there is little evidence of widespread shortages. There are concerns that integration of providers into Accountable Care Organizations leads to consolidation in Connecticut’s healthcare market, driving up prices for care without improvements in quality.

Healthcare System Deeper Dive

Other countries have clearly organized structures for their healthcare system. The US, including Connecticut, is different. Connecticut’s healthcare system is a mosaic of different systems operating by different rules and processes. There are general outlines, but many exceptions. And even the general outlines of our system can change rapidly.

There are a couple of ways to consider the structure of Connecticut’s healthcare system. The first focuses on the categories of services – primary, secondary, and tertiary care. Another framework considers how healthcare entities relate to each other – independent hospitals and practices, loose networks, and large health systems. This second framework is changing quickly in our state, and across the US.

Primary, secondary, and tertiary care

Primary care represents the bulk of healthcare services and the largest category of providers. Primary care considers the whole patient, and the factors in their lives that impact their health. Half of US doctor visits are for primary care. Primary care emphasizes prevention and care management to improve and maintain health. Despite its emphasis on prevention, rates paid for primary care services are generally lower than for secondary or tertiary care.

Primary care includes the fields of family medicine, general internal medicine, pediatrics, geriatrics, and sometimes gynecology. Primary care providers (PCPs) can include physicians, nurse practitioners, and physician assistants. Connecticut ranks tenth highest in the nation in the number of primary care physicians per capita; 30% of active Connecticut physicians practice in primary care.

In some ideal models of healthcare systems, patients with a health problem would first contact their PCP. That provider, an individual or a practice, should be a medical home that has a long-term relationship with the patient and appropriate caregivers. Patients should get regular preventive care appointments with their PCP, whether or not they have a health problem. Primary care providers should have access to the patients’ entire medical record, including care received by outside providers.

Ideally, the medical home is patient-centered, meaning that patients decide on their health goals and develop the plan to reach those goals – such as losing weight, quitting smoking, or getting more exercise — in collaboration with their PCP. Because of their long-term relationships, PCPs understand the contexts that influence each patient’s health, such as social factors, employment or income stressors, personal safety, stable and safe housing. Understanding the contexts of a patient’s care, PCPs can help the patient develop realistic plans to improve health. Medical home providers support patients and give them the tools they need to become healthier.

When a patient with a medical home has a health problem, they don’t need to figure out which provider to call – they call their PCP. The medical home provider then assesses the problem, possibly running some tests, and recommends a treatment. Often this all happens in one visit to the PCP, not requiring multiple visits to other providers that can fragment care. If the problem is more complex, the PCP may refer and make an appointment for the patient with a specialist for more care. The medical home PCP will connect with the specialist on the care provided. Follow up care may continue with the specialist or the PCP.

While the flow of care beginning with primary care and moving to specialists is an ideal, it’s not the rule in the United States or in Connecticut. Although less than other states, one in six Connecticut adults doesn’t have a personal doctor or provider. Patients can enter the system at any point, or multiple points, going directly to specialists without consulting a PCP first. The providers caring for a single patient may not be communicating or coordinating care with each other. While this allows patients the freedom to choose their providers and their path through the system, this can lead to conflicting and duplicated treatments, raising costs and potentially causing harm to patients.

Secondary care includes specialty services such as surgery, neurology, psychiatry, dermatology, and cardiology. Specialists focus their practice on specific systems of the body, rather than the entire health of the patient, and focus on curing disease more than prevention. Rates paid for specialist services are generally higher than for primary care but less than for tertiary care.

Often patients are referred to specialists by their primary care provider. PCPs and other providers employed by or affiliated with large health systems have significant financial incentives to make referrals within the health system. While patients have the right to go to any provider who accepts their coverage (Medicare, Medicaid, or private insurance), health system efforts to keep patients within their network (called leakage control) can interfere with patients choosing the provider who best fits their needs. This can be especially difficult in mental health care where finding a provider that is a good fit is critical to successful care.

Tertiary care includes highly specialized providers and facilities. A small number of hospitals offer tertiary care. Tertiary care is often provided over a long timeframe and usually located at state-of-the-art medical centers. Tertiary care includes cardiac surgery, transplant services, advanced neonatal care, and treatment for severe burns. Payment rates for highly specialized physicians are much higher than for other providers and costs for tertiary care are usually very high.

Unlike other countries, there is little thoughtful planning in the US or in Connecticut to ensure resources are appropriately divided between primary, secondary, and tertiary care. Incentives favor expanding specialty care over primary care.

Increasing spending on primary care does not lower the total cost of care. Connecticut’s Office of Health Strategy (OHS) and their consultants have asserted that it is critical to double spending on primary care in Connecticut to lower skyrocketing  total healthcare costs. It’s very appealing to think that increasing investments in prevention and care management will reduce total costs. It avoids the difficult work of getting large health systems and drug companies to lower their extreme prices. But unfortunately, there is no evidence to support the idea.

Is there a shortage of primary care capacity in Connecticut?

Connecticut residents have far better access to primary care than most Americans. Primary care providers per capita, across definitions and roles, are as much as 47% higher in Connecticut than the US average. Five out of six Connecticut adults report that they have a personal relationship with a doctor/healthcare provider, ranking Connecticut tenth best in among states.

Whether there is a shortage of primary care capacity is controversial. The Academy of American Medical Colleges reports that by 2035 there will be a shortage of 17,800 to 48,000 primary care physicians. But other experts estimate that if we embraced new care models and allowed non-physician advanced practice providers to practice at the top of their training and license, there would be no shortage of primary care capacity.

What’s being proposed in Connecticut for primary care?

The state Office of Health Strategy has published an ambitious and costly plan to significantly expand primary care capacity in Connecticut. The plan includes:

  • Significantly increasing spending on primary care — doubling the proportion of total state healthcare spending devoted to primary care by 2025
  • Increase compensation for primary care physicians
  • Expand responsibilities for primary care practices to address patients’ non-medical, social needs
  • OHS will create a new process, different from nationally recognized evidence-based certification, to certify practices for higher reimbursements
  • Expand alternative payment models to fund primary care, especially capitation

Advocates’ concerns with OHS’s plan include:

  • The estimated increase of $3.9 billion in Connecticut healthcare spending on primary care will require significant cuts in other critical care, because OHS also plans to sharply lower the growth of total healthcare spending simultaneously
  • It is not clear that access to primary care is the most critical shortage facing Connecticut
  • OHS has not provided evidence to support the proposals’ effectiveness
  • The process to develop and design OHS’s proposals was driven by primary care physicians and missed independent public input
  • Primary care capitation has failed despite over a decade of trials in other states and programs with hundreds of thousands of patients
  • OHS has no meaningful plan to monitor for harm to patients suffering from reduced access in primary care, as has happened in capitated programs, or from services cut to accommodate the higher primary care spending
  • OHS’s plan would likely fall hardest on already underserved communities of color, making Connecticut’s health disparities worse
  • There are better, proven options to support primary care that are safer for patients and payers and less costly

The system and how healthcare entities relate to each other

In the past, physicians practiced in small, independent practices they owned. Most physicians were self-employed. Hospitals were also private, independent, and operated as nonprofit organizations. Hospitals and practices were connected informally by physician admitting privileges at hospitals and physician referrals. Physicians visited their patients during hospital stays and often served on hospital boards and committees.

This model has changed significantly over the years, evolving into larger health systems connected in more formal ways. Healthcare practices and hospitals have consolidated with other providers such as nursing homes, home health agencies, and behavioral health providers. These very large health systems are run by professional administrators with very strong financial connections between providers and the system. Three out of four physicians in the Northeast are now employed by hospitals or corporations.

Intermediate forms of consolidation include large practices and community health centers. Large practices may be multispecialty groups, with providers of varying types, or providers in a single specialty, managing and often owning the groups. More recently, some large physician groups have sold their practice to insurers or private equity funds.

Community health centers emphasize primary and preventive care for underserved communities. In addition to medical care, they may also provide transportation, language translation, care management, and health education. They care for patients without regard to income, lack of coverage, or immigration status. Because of their mission, community health centers receive additional financial support and other resources from both federal and state governments. Community health center patients are charged for care based on a slide fee scale that varies by income. Connecticut has 17 community health centers, each with multiple sites. They care for 392,000 patients each year; 63% of patients are covered by Medicaid.

The biggest trend in health care structure is the consolidation of providers at all levels into very large health systems, called Accountable Care Organizations (ACOs). According to the federal Centers for Medicare and Medicaid Services “ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care.” Patients can get care from providers outside the ACO, but policies discourage this. The two largest health systems in Connecticut are Hartford Healthcare and Yale-New Haven Health.

ACOs are at “financial risk” for the care their patients use. If an ACO’s patients use less care than expected, the ACO shares in the savings. ACOs can lower patients’ care costs by providing preventive care to lower emergency room visits and hospital admissions. But they can also lower costs by stinting on care — denying necessary care that lowers patients’ quality of life but does not end up in more costly care. There are concerns that patients aren’t told about better options that will get them healthier more quickly with fewer side effects if the treatments are more expensive, as their provider has an incentive to have them use the less-costly, but less-effective treatment.

To avoid stinting on care, insurers and government programs require ACOs meet quality standards to receive shared savings payments. However the quality metrics are very easy to meet; the large majority of ACOs meet all the standards. There are also concerns that ACOs avoid costly patients to improve their financial returns. Risk adjustment, the system to adjust finances for patients’ health status, may make this cherry-picking worse.

While ACOs are designed to save money, there is no evidence that they do. In fact, repeated evaluations have found that, when added administrative costs are included, they cost more. ACOs are part of the accelerating trend of consolidation in healthcare markets, that is driving up costs without improving the quality or access to care.

Connecticut has among the highest levels of ACOs per capita in the US with over 20% of state residents under the care of an ACO. As of 2022, there are 14 ACOs contracted with Medicare responsible for the care of Connecticut beneficiaries; all but three are multistate. Connecticut Medicaid contracts with 12 ACOs currently. It is unclear how many Connecticut ACOs have contracts with private insurers. Most people don’t know if they are attributed (assigned) to an ACO that is at financial risk for their costs of care.

Unlike health insurers, which are at financial risk for the costs of patient care, ACOs are not licensed or certified by either the federal or Connecticut state governments. Calls to regulate ACOs to ensure patients are not being harmed and that shared savings are earned by improving care have not passed.

  • More emphasis and resources to primary care in Connecticut
    • It’s unclear what form that will take or where resources will be directed
  • Consolidation of providers into larger systems will continue and possibly accelerate
    • This will raise prices and reduce consumer choice of providers for care
  • There may be more calls to monitor and regulate ACOs and large health systems, but it will be slow to implement

Updated October 30, 2023