Do Physicians Possess Market Power?

Abstract

We study the degree to which greater physician concentration leads to higher service prices charged by physicians in the commercially insured medical-care market.Using a database of physicians throughout the entire United States, we construct physician-firm concentration measures based on market boundaries defined by fixed driving times-we label the"fixed-travel-time HHI" (FTHHI). Similar to the measure constructed by Kessler and McClellan [2000], the FTHHI is constructed to mitigate omitted-variable bias attributable to higher quality physicians attracting a higher share of patients. We link these concentration measures to health insurance claims.We find that physicians in more concentrated markets charge higher service prices.Cross-sectional estimates show that a ten percent increase in concentration is associated with a 0.5 to 1 percent increase in fees. Panel estimates show the effect may be twice as large, although estimates are less precisely estimated. Our estimates imply that physician consolidation has caused about an eight percent increase in fees over the last 20 years.

Physician competition and the provision of care: evidence from heart attacks

“…15 The enrollee file is a separate data file from the insurance claims and tracks whether an individual was enrolled in a health plan, regardless of whether or not she received care.…”

“…Our estimation relies on a measure of physician market concentration called the "Fixed-Travel-Time Herfindahl-Hirshman index" (FTHHI). This measure was used in Dunn and Shapiro [2014] to assess the relationship between physician concentration and service prices. Similar to the measure of hospital competition used by Kessler and McClellan [2000], the FTHHI is based on theoretically predicted market shares.…”

The Results Are Only as Good as the Sample: Assessing Three National Physician Sampling Frames

“…In addition, SK&A provides practice-level variables that are not available in either the NPPES or AMA files (patient volume, number of providers, site specialty, and ownership), although we do not attempt to verify the accuracy of the practice-level information in this article. 8 The coverage-related issues inherent in physician sampling have been documented; and research has discussed some of the limitations of existing sample frames. 4,[9][10][11] However, relatively little is known about how specific sampling frames differ from each other in terms of the coverage and accuracy of contact information.…”

Physician Payments Under Health Care Reform

“…2005 to 2008 and includes information on the name, location, and specialty of physicians (see Dunn and Shapiro [2013] for more information about the SK&A database).…”

“…All else equal, more competition between insurers acts to raise physician payments (Dunn and Shapiro [2013] It is important keep in mind the possibility that the reform had no effect on service prices. In particular, physicians may have sufficient capacity or may be able to adjust practice patterns, allowing them to see more patients at pre-reform rates.…”