Physician Practice Competition and Prices Paid by Private Insurers for Office Visits

Baker, Laurence C.; Bundorf, M. Kate; Royalty, Anne Beeson; Levin, Zachary

doi:10.1001/jama.2014.10921

Cited by 114 publications

(88 citation statements)

References 21 publications

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“…Focusing on cardiologists and orthopedists, their findings indicate the potential for physicians to exercise market power, with a 10 % increase in their HHI measure resulting in a 1 % increase in price. Baker et al (2014) find similar evidence of a relationship between market concentration and price, with their analysis indicating an 8-16 % difference in price for counties at the 90th percentile versus the 10th percentile of concentration (as measured using practice-level HHI). Clemens and Gottlieb's (2013) study of the effect of changes in Medicare reimbursement on prices also suggests the presence of physician market power, with findings indicating that Medicare's influence on private payments is greatest in less concentrated markets.…”

Section: Previous Workmentioning

confidence: 54%

“…DaNavas-Walt et al (2010) report that 172 million non-elderly individuals had private health insurance in 2009, implying that these data cover approximately 70-87% of the privately insured population. 14 TINs have been used to identify practice affiliation in previous studies of physician groups and Medicare demonstration projects (Pham et al 2007;CMS 2010CMS , 2011, and as Casalino (2006) and Baker et al (2014) note, physician groups sharing a TIN are typically financially integrated. that contributes the most usable claims based on our selection criteria.…”

Section: Datamentioning

confidence: 99%

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Market power and provider consolidation in physician markets

Kleiner

White

Lyons

2015

Int J Health Econ Manag.

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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.

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Section: Previous Workmentioning

confidence: 54%

Section: Datamentioning

confidence: 99%

Market power and provider consolidation in physician markets

Kleiner

White

Lyons

2015

Int J Health Econ Manag.

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“…In addition to urology groups, our data set also explores the relative advantages and disadvantages of other practice structures at the individual physician level. The importance of competition in predicting patient volume was facilitated by use of the Herfindahl-Hirschman Index [17]. Importantly, clustering by county mitigated the potential effect of variable participation in Medicare Advantage plans [18].…”

Section: Discussionmentioning

confidence: 99%

“…The Herfindahl-Hirschman Index (HHI) is a standard measure of economic competition that has been extensively applied to health policy research [17]. The HHI is calculated by summing the results (in percentages) of the squared market share competing firms.…”

Section: Demographic Information For Physicians Practicesmentioning

confidence: 99%

Radiation Oncology Physician Practice in the Modern Era: A Statewide Analysis of Medicare Reimbursement

Kao

Zucker

Wong

et al. 2017

International Journal of Radiation Oncology*Biology*Physics

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“…The reports in this issue of JAMA by Robinson and Miller 3 and by Baker and colleagues 4 suggest that health care organizations and perhaps physicians benefit, in the form of higher prices. Robinson and Miller examined total spending for more than 4.5 million patients in California physician organizations owned by physicians, by local hospitals, or by multihospital systems.…”

mentioning

confidence: 99%

Who Benefits From Health System Change?

Cutler

2014

JAMA

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The organization of medical care is changing more rapidly now than at any point in the last century. For decades, health care was a cottage industry: physicians practiced independently or in small groups and had arms-length relationships with hospitals, imaging and laborator y facilities, and other health care entities. Those organizations alternately competed and cooperated as part of an informal local health care system.Recent years have seen the advent of large, integrated, corporate medicine. Today, the typical US city has 3 to 4 integrated health care systems, generally anchored around large hospitals and extending to suburban areas. 1 These systems are conglomerations of hospitals, primary care and specialist physicians, outpatient facilities, and postacute care facilities. There remains a fringe of unaffiliated institutions and physicians, but the number of such institutions is declining.Why is this occurring? And who benefits from it? Three reports in this issue of JAMA examine this question. Joynt and colleagues 2 examined the question of why consolidation is occurring, focusing on the conversion of not-for-profit hospitals to for-profit status. During their study period (2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010), 237 hospitals (5.2% of their sample) converted from not-for-profit to for-profit status. For each converting hospital, the authors identified up to 3 matched control hospitals based on size category, teaching status, and region. In their primary analysis, they compared clinical and economic outcomes 2 years before conversion to 2 years after conversion and used difference-in-differences models to minimize any temporary economic and clinical outcomes occurring just before the conversion and to identify changes that occurred after a reasonable period.A central finding of the study by Joynt et al was that hospitals that converted from not-for-profit to for-profit status had very poor financial performance prior to conversion. The typical converting hospital had a patient-based operating margin ([net revenue from patient care and related revenue − total operating expenses]/net revenue from patient care and related revenue) of −6.6% and a total margin ([total revenue − total costs]/total revenue), including non-patient care activities, of −1.2%. Performance at this level is clearly not sustainable. Thus, part of the rationale for conversion is to stabilize cash flow.Based on the findings of Joynt et al, hospitals converting to for-profit status were successful at this. Between 2 years before and 2 years after conversion, operating margins at converting hospitals increased by 3.2%, and total margins increased by 2.2%. Operating margins remained negative, but the hospital as a whole would break even. This improvement in margins was significantly greater for the converting hospitals than for a set of matched controls.Joynt et al were not able to determine the factors associated with cash flow improvements, but they did rule out some explanations. The authors showed that neither Medicare re...

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Physician Practice Competition and Prices Paid by Private Insurers for Office Visits

Abstract: More competition among physicians is related to lower prices paid by private PPOs for office visits. These results may inform work on policies that influence practice competition.

Cited by 114 publications

References 21 publications

Market power and provider consolidation in physician markets

Market power and provider consolidation in physician markets

Radiation Oncology Physician Practice in the Modern Era: A Statewide Analysis of Medicare Reimbursement

Who Benefits From Health System Change?

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