The effect of hospital acquisitions of physician practices on prices and spending

Publication date: May 2018
Source:Journal of Health Economics, Volume 59
Author(s): Cory Capps, David Dranove, Christopher Ody
During the past decade, U.S. hospitals have acquired a large number of physician practices. For example, from 2007 to 2013, hospitals acquired nearly 10% of the practices in our sample. We find that the prices for the services provided by acquired physicians increase by an average of 14.1% post-acquisition. Nearly half of this increase is attributable to the exploitation of payment rules. Price increases are larger when the acquiring hospital has a larger share of its inpatient market. We find that integration of primary care physicians increases enrollee spending by 4.9%.