Changes in Physician Market Structure Financial and Clinical Effects - - PowerPoint PPT Presentation

Changes in Physician Market Structure

Financial and Clinical Effects Nathan E. Wilson

Federal Trade Commission Bureau of Economics nwilson@ftc.gov

February 2018

The views expressed are those of the speaker. They do not necessarily represent those

• f the Federal Trade Commission or any of its Commissioners.

Thinking About Consolidation

◮ Lots of changes to physician markets ◮ General trend of big firms getting bigger ◮ Concentration statistics tell us how organization of the

industry may be changing

◮ However, they do not necessarily imply changes in competition ◮ Absent changes in competition, antitrust agencies have little

scope for intervention

◮ When changes in competition are likely, antitrust enforcers

worry about prices, quality

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Evidence of Widespread Horizontal Consolidation

Figure: Variation in Practice Size Change

Capps, Dranove, & Ody, Health Affairs, 2017

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Local Physician Markets Show Substantial Consolidation

.05 .1 .15 Fraction 2000 4000 6000 8000 10000 Adjusted HHI 2005 2011

Figure: Cardiology Concentration over Time

Koch, Wendling, & Wilson, Health Services Review, forthcoming

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Multiple Specialties Affected

Figure: Distribution of Market Structure by Specialty, 2010

Baker, Bundorf, Royalty, & Levin, JAMA, 2014

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Why We Care About Consolidation: Price Increases

Koch & Ulrick, FTC Working Paper, 2017

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Why We Care About Consolidation: Quality

Figure: Increases in Concentration Associated with Worse Outcomes

Koch, Wendling, & Wilson, Health Services Review, forthcoming

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Physician Markets Also Changing Vertically

Figure: Vertical Integration Measured from Hospital Perspective

Short, Ho, & McCracken, Rice University Working Paper, 2017

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Effects of Vertical Integration Often Worrying ...

Post, Buchmueller, & Ryan, Medical Care Research and Review, 2017

• N. E. Wilson (FTC)

Changes in Physician Market Structure

While Benefits from Vertical Integration Nebulous

−.2 −.1 .1

Mild diabetes complications

−20 −10 10 20

Quarters since merger

−.2 −.1 .1

Severe diabetes complications

−20 −10 10 20

Quarters since merger

Men −.2 −.1 .1

Glaucoma

−20 −10 10 20

Quarters since merger

−.2 −.1 .1

Mild diabetes complications

−20 −10 10 20

Quarters since merger

−.2 −.1 .1

Severe diabetes complications

−20 −10 10 20

Quarters since merger

Women −.2 −.1 .1

Glaucoma

−20 −10 10 20

Quarters since merger

lead and lag merger coefficients and 95% confidence intervals Diabetes complication outcomes from a linear probability model

Koch, Wendling, & Wilson, work in progress, 2018

• N. E. Wilson (FTC)

Changes in Physician Market Structure

Conclusion

◮ Physician markets experiencing considerable horizontal and

vertical consolidation

◮ Scholarly literature suggests that consolidation often leads to

higher spending and/or prices ... with no consistent evidence of substantial clinical efficiencies

◮ All future deals need to be assessed on individual merits ◮ Antitrust agencies active in challenging subset of deals that

threaten competition

◮ E.g., Sanford-MDC; St. Lukes-Saltzer

• N. E. Wilson (FTC)

Changes in Physician Market Structure