We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreements (NCAs) causes 4.3 percent higher physician prices, and declines in practice sizes and concentration. Using two databases containing every physician establishment and firm between 1996 and 2007, linked to negotiated prices, we show that larger practices have lower prices for services with high fixed costs, consistent with economies of scale. In contrast, increases in firm concentration conditional on establishment concentration leads to higher prices.
Hausman, Naomi, and Kurt Lavetti.
"Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes."
American Economic Journal: Applied Economics,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Insurance; Insurance Companies; Actuarial Studies
Analysis of Health Care Markets
Professional Labor Markets; Occupational Licensing
Business and Securities Law
Oligopoly and Other Imperfect Markets