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%.
Cory Capps, David Dranove, and Christopher Ody
Journal of Health Economics