Physician investment in hospitals: Specialization, selection, and quality in cardiac care

Physician ownership of hospitals involves several competing economic forces. Physician-owners may be incentivized to “cherry-pick” and treat profitable patients at their facilities. However, physician-owned hospitals are often specialized and may provide higher-quality care for well-matched patients. Using multiple identification approaches, I document no significant mortality improvement for cardiac patients treated at physician-owned hospitals. Using aggregate data on ownership to infer physician-owner preferences in a hospital choice model, my results rule out significant cherry-picking within physician-owners’ patient populations. However, both facility location and a healthier overall patient population among physician-owners drive advantageous selection of patients into physician-owned hospitals.