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Owning the Agent: Hospital Influence on Physician Behaviors

Haizhen Lin (), Ian McCarthy, Michael R. Richards and Christopher Whaley ()

No 28859, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The organizational structure of U.S. health care has changed dramatically in recent years, with nearly half of physicians now employed by hospitals. This trend toward increasing vertical alignment between physicians and hospitals may alter physician behavior relative to physicians remaining in independent or group practices. We examine the effects of such vertical alignment using an instrumental variable strategy and a clinical context facilitating well-defined episodes of care. We find no significant or economically meaningful effect on total Medicare payments per episode, characterized by a large and statistically significant reduction in professional services claims, particularly among referrals to other non-integrated physicians. Acquiring hospitals ultimately capture more revenue following a physician practice acquisition; yet, the smaller overall bundle of care generates no net savings to Medicare due to location-based payment rules favorable to hospitals.

JEL-codes: H51 I11 I18 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-com, nep-hea and nep-ias
Note: HC HE IO
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