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Market power and provider consolidation in physician markets

Author

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  • Samuel Kleiner
  • William White
  • Sean Lyons
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. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Samuel Kleiner & William White & Sean Lyons, 2015. "Market power and provider consolidation in physician markets," International Journal of Health Economics and Management, Springer, vol. 15(1), pages 99-126, March.
    • Handle: RePEc:kap:ijhcfe:v:15:y:2015:i:1:p:99-126
    DOI: 10.1007/s10754-014-9160-y
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    References listed on IDEAS

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    Cited by:

    1. Christopher S. Brunt & Joshua R. Hendrickson & John R. Bowblis, 2020. "Primary care competition and quality of care: Empirical evidence from Medicare," Health Economics, John Wiley & Sons, Ltd., vol. 29(9), pages 1048-1061, September.
    2. Abe Dunn & Adam Hale Shapiro, 2018. "Physician Competition and the Provision of Care: Evidence from Heart Attacks," American Journal of Health Economics, University of Chicago Press, vol. 4(2), pages 226-261, Spring.
    3. Clemens, Jeffrey & Gottlieb, Joshua D. & Molnár, Tímea Laura, 2017. "Do health insurers innovate? Evidence from the anatomy of physician payments," Journal of Health Economics, Elsevier, vol. 55(C), pages 153-167.
    4. Naomi Hausman & Kurt Lavetti, 2021. "Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes," American Economic Journal: Applied Economics, American Economic Association, vol. 13(2), pages 258-296, April.
    5. Daria Pelech, 2018. "An Analysis of Private-Sector Prices for Physicians’ Services: Working Paper 2018-01," Working Papers 53441, Congressional Budget Office.
    6. Jihui Chen, 2019. "The Effects of Competition on Prescription Payments in Retail Pharmacy Markets," Southern Economic Journal, John Wiley & Sons, vol. 85(3), pages 865-898, January.
    7. Jeffrey Clemens & Joshua D. Gottlieb & Tímea Laura Molnár, 2015. "The Anatomy of Physician Payments: Contracting Subject to Complexity," NBER Working Papers 21642, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Physicians; Antitrust; Health; Market structure; D4; I11; L4;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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