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Vertical Alignment Between Hospitals and Physicians as a Bargaining Response to Commercial Insurance Markets

Ian McCarthy () and Sean Shenghsiu Huang ()
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Sean Shenghsiu Huang: Georgetown University

Review of Industrial Organization, 2018, vol. 53, issue 1, 7-29

Abstract: Abstract The relationship between physicians and hospitals has dramatically changed over the last decade, with the employer–employee model supplanting the traditional model of private physicians with hospital admitting privileges. We examine the motivation for this form of vertical integration by considering physician–hospital alignment as a tool to increase bargaining power with private insurers. We find a positive and significant relationship between private insurance concentration on physician–hospital alignment, which is driven predominantly by for-profit hospitals.

Keywords: Vertical integration; Healthcare markets; Physician alignment; Bargaining; Health insurance (search for similar items in EconPapers)
Date: 2018
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