The effect of hospital acquisitions of physician practices on prices and spending

J Health Econ. 2018 May:59:139-152. doi: 10.1016/j.jhealeco.2018.04.001. Epub 2018 Apr 22.


During the past decade, U.S. hospitals have acquired a large number of physician practices. For example, from 2007 to 2013, hospitals acquired nearly 10% of the practices in our sample. We find that the prices for the services provided by acquired physicians increase by an average of 14.1% post-acquisition. Nearly half of this increase is attributable to the exploitation of payment rules. Price increases are larger when the acquiring hospital has a larger share of its inpatient market. We find that integration of primary care physicians increases enrollee spending by 4.9%.

Keywords: Healthcare spending; Hospitals; Integration; Mergers; Physicians.

MeSH terms

  • Economics, Hospital / organization & administration*
  • Economics, Hospital / statistics & numerical data
  • Fees, Medical / statistics & numerical data*
  • General Practice / organization & administration*
  • Health Expenditures / statistics & numerical data*
  • Health Facility Merger / economics*
  • Health Facility Merger / organization & administration
  • Health Facility Merger / statistics & numerical data
  • Hospital Administration* / economics
  • Humans
  • Practice Patterns, Physicians' / economics
  • Practice Patterns, Physicians' / organization & administration*
  • Practice Patterns, Physicians' / statistics & numerical data
  • United States