Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes†

Naomi Hausman*, Kurt Lavetti

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreements (NCAs) causes 4.3 percent higher physician prices, and declines in practice sizes and concentration. Using two databases containing every physician establishment and firm between 1996 and 2007, linked to negotiated prices, we show that larger practices have lower prices for services with high fixed costs, consistent with economies of scale. In contrast, increases in firm concentration conditional on establishment concentration leads to higher prices.

Original languageAmerican English
Pages (from-to)258-296
Number of pages39
JournalAmerican Economic Journal: Applied Economics
Volume13
Issue number2
DOIs
StatePublished - Apr 2021

Bibliographical note

Publisher Copyright:
© 2021, American Economic Journal: Applied Economics. All Rights Reserved.

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