When a clinic system is acquired by an integrated delivery system (IDS), the ownership change includes both vertical integration with the hospital(s), and horizontal integration with the IDS's previously owned or “legacy” clinics, causing increased market concentration in physician services. Although there is a robust literature on the impact of hospital market concentration, the literature on physician market concentration is sparse. The objective of this study is to determine the impact on physician prices when two IDSs acquired three multispecialty clinic systems in Minneapolis–St Paul, Minnesota at the end of 2007, using commercial claims data from a large health plan (2006–2011). Using a difference-in-differences model and nonacquired clinics as controls, we found that four years after the acquisitions (2011), average physician price indices in the acquired clinic systems were 32–47% higher than expected in absence of the acquisitions. Average physician prices in the IDS legacy clinics were 14–20% higher in 2011 than expected. Procedure-specific prices for common office visit and inpatient procedures also increased following the acquisitions.
Bibliographical noteFunding Information:
The authors gratefully acknowledge funding for this work from The Commonwealth Fund (grant number 20120304). In addition, we benefited greatly from comments and suggestions by participants at the NBER Hospital Organization and Productivity Conference held in October, 2013, and participants in the Competition in Healthcare Conference held at the University of Florida in May, 2015.
- health care markets
- horizontal integration
- physician prices
- vertical integration