Market power and provider consolidation in physician markets

Abstract

Physician services comprise a substantial share of total health care spending, and the price of health care services has been cited as a key contributor to the disproportionately high rate of health care spending in the US. However, despite a large literature analyzing market power in the hospital and insurance industries, less is known about the extent to which physicians exercise market power. In this study we make use of a private health insurance claims data set to analyze physician market power for two specialties within three mid-sized US metropolitan areas. Using a method developed for hospital competition analysis, we estimate measures of consumer willingness-to-pay for physician practices within each of these markets and relate these to the prices paid to these practices for a set of physician services. Our results are suggestive of the presence of market power in the markets that we analyze. We simulate physician practice mergers for the two largest practices in each market for each specialty analyzed. Results suggest that practice mergers could result in price increases deemed significant by antitrust authorities in some markets but not in others.

The Effects of Competition on Prescription Payments in Retail Pharmacy Markets

“…This article is related to previous studies on health providers (e.g., physicians and hospitals), which conclude that higher market concentration leads to higher negotiated service prices (Baker et al ; Dunn and Shapiro ; Kleiner, White, and Lyons ; Gravelle et al ). My analysis adds to this literature by examining the issue in the retail prescription drug market using comprehensive patient‐level data.…”

Physician competition and the provision of care: evidence from heart attacks

“…24 Another measure is an indicator of whether the patient was ever admitted to a hospital in 365 days before the AMI occurred. By construction, patients with an unexpected AMI (i.e., those without any cardiovascular preconditions) are more likely to have lower values of these health indicator variables, on average.…”

“…See Appendix A. 24 The CCI assigns scores as follows: 1 each for AMI, congestive heart failure, peripheral disease, cerebrovascular disease, dementia, chronic pulmonary disease, peptic ulcer disease, mild liver disease, diabetes without end-organ damage. 2 each for hemiplegia, moderate or severe renal disease, diabetes with endorgan damage, tumor with metastasis, leukemia, lymphoma.…”

Antitrust and Accountable Care Organizations

“…In order to broadly analyze the extent to which physician practices contemplating ACO participation would potentially concern the antitrust authorities, we use a 20% sample of 2009 Medicare physician claims (a period immediately preceding the passage of the Affordable Care Act) as specified in the guidelines when analyzing specialty-specific PSAs for physician services. 1 Consistent with previous studies of physician groups (Baker, Bundorf, Royalty, & Levin, 2014;Kleiner, White, & Lyons, 2015;Pham, Schrag, O'Malley, Wu, & Bach, 2007;Welch, Cuellar, Stearns, & Bindman, 2013), these same guidelines further specify the use of the Tax ID field in the Medicare data to identify practices. 2 In addition, we follow the criteria specified in the guidelines to create practice-level PSAs by identifying, for each practice, the smallest set of patient ZIP codes from which a practice draws 75% of its patients.…”