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The Effect of Hospital Acquisitions of Physician Practices on Prices and Spending

Cory Capps, David Dranove, and Christopher Ody
Journal of Health Economics
May 2018

During the past decade, US hospitals have acquired many physician practices. For example, from 2007 to 2013, hospitals acquired nearly 10% of the practices in the sample Partner Cory Capps and his co-authors used for this study. The prices for the services provided by acquired physicians increased by an average of 14.1% post-acquisition. Nearly half of the increase was attributable to the exploitation of payment rules. Dr. Capps and his co-authors also found that price increases are larger when the acquiring hospital has a larger share of its inpatient market. Ultimately, the authors found find that integration of primary care physicians increased enrollee spending by 4.9%.

The article was named a Finalist for the Research Award in the NIHCM 25th Annual Health Care Research and Journalism Awards.


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