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Does Multispecialty Practice Enhance Physician Market Power?

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  • Laurence C. Baker
  • M. Kate Bundorf
  • Daniel P. Kessler

Abstract

In health care, vertical integration—common ownership of producers of complementary services—may have both pro- and anticompetitive effects. We use data on 40 million commercially insured individuals from the Health Care Cost Institute to construct price indices for office visits to general practice and specialist physicians for the years 2008–12. Controlling for generalist market concentration, we find that generalists charge higher prices when they are integrated with specialists, and that the effect of integration is larger in more concentrated specialist markets. Conversely, controlling for specialist market concentration, specialists charge higher prices when integrated with generalists, with larger effects in more concentrated generalist markets. Our results suggest that multispecialty practice enhances physician market power.

Suggested Citation

  • Laurence C. Baker & M. Kate Bundorf & Daniel P. Kessler, 2020. "Does Multispecialty Practice Enhance Physician Market Power?," American Journal of Health Economics, University of Chicago Press, vol. 6(3), pages 324-347.
    • Handle: RePEc:ucp:amjhec:doi:10.1086/708942
    DOI: 10.1086/708942
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    Cited by:

    1. Leila Agha & Keith Marzilli Ericson & Xiaoxi Zhao, 2020. "The Impact of Organizational Boundaries on Healthcare Coordination and Utilization," NBER Working Papers 28179, National Bureau of Economic Research, Inc.
    2. Ericson, Keith Marzilli & Sacarny, Adam & Zhou, Annetta, 2023. "Dangerous prescribing and healthcare fragmentation: Evidence from opioids," Journal of Public Economics, Elsevier, vol. 225(C).
    3. Marissa Beck & Fiona Scott Morton, 2021. "Evaluating the Evidence on Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 273-302, September.
    4. Rabbani, Maysam, 2021. "Mergers with Future Rivals Can Boost Prices, Intensify Market Concentration, and Bar Entry," MPRA Paper 112864, University Library of Munich, Germany, revised 26 Apr 2022.
    5. Ralph Sonenshine & Seyni Da, 2022. "The Impact of Vertical Theories of Harm on Investor Returns: An Event Study of US Vertical Mergers," JRFM, MDPI, vol. 15(7), pages 1-19, July.

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