Hospital ownership of physician practices has grown across the US, and these strategic decisions seem to drive higher prices and spending. Using detailed physician ownership information and a universe of Florida discharge records, we show novel evidence of hospital-physician integration foreclosure effects within outpatient procedure markets. Following hospital acquisition, physicians shift nearly 10% of their Medicare and commercially insured cases away from ambulatory surgery centers (ASCs) to hospital outpatient departments and are up to 18% less likely to use an ASC at all. Distorting physician choices over treatment setting can generate allocative inefficiencies and forgo state and federal tax revenue.
Richards, Michael R., Jonathan Seward, and Christopher M. Whaley, Treatment consolidation after vertical integration: Evidence from outpatient procedure markets. Santa Monica, CA: RAND Corporation, 2020. https://www.rand.org/pubs/working_papers/WRA621-1.html.
Richards, Michael R., Jonathan Seward, and Christopher M. Whaley, Treatment consolidation after vertical integration: Evidence from outpatient procedure markets, RAND Corporation, WR-A621-1, 2020. As of January 31, 2023: https://www.rand.org/pubs/working_papers/WRA621-1.html