Health Care Industry IO, Policy
Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)
- Chair: Michael Chernew, Harvard University
Price Effects of Vertical Integration and Joint Contracting between Physicians and Hospitals
AbstractVertical integration in health care has recently garnered scrutiny by antitrust authorities and state regulators. We examined trends, geographic variation, and price effects of vertical integration and joint contracting between physicians and hospitals using physician affiliations and all-payer claims data from Massachusetts in 2013-2017. Vertical integration and joint contracting with small and medium systems rose from 19.5% to 32.8% for primary care physicians and from 26.1% to 37.8% for specialists; vertical integration and joint contracting with large systems slightly declined. Geographic variation in vertical integration and joint contracting with large systems increased. We found that vertical integration and joint contracting led to price increases of 2.1%-12.0% for primary care physicians and 0.7%-6.0% for specialists, with the greatest increases in large systems. These findings can inform policymakers seeking to limit growth in health care prices.
The Impact of Organizational Boundaries on Healthcare Coordination and Utilization
AbstractPatients often receive healthcare from providers spread across different firms. Transaction costs, imperfect information, and other frictions can make it difficult to coordinate production across firm boundaries, but we do not know how these challenges affect healthcare. We define and measure organizational concentration: the distribution across organizations of a patient’s healthcare. Medicare claims show that organizational concentration varies substantially across physicians and regions, and that patients who move to more concentrated regions have lower healthcare utilization. Further, we show that when primary care physicians (PCPs) with higher organizational concentration exit the local market, their patients switch to more typical PCPs with lower organizational concentration and then have higher healthcare utilization. Patients who switch to a PCP with 1 SD higher organizational concentration have 10% lower healthcare utilization. This finding is robust to controlling for the spread of patient care across providers. Increases in organizational concentration have no detectable effect on emergency department utilization or hospitalization rates, but do predict improvements in diabetes care.
- I1 - Health