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October 03, 2016

Growing Body of Research Associates Provider Consolidation with Higher Prices - New Research Insights

Mergers between hospitals and physician practices have increased rapidly in recent years, raising important questions about how this consolidation affects providers’ leverage in negotiating higher prices. Dr. Laurence Baker, Professor of Health Research and Policy at Stanford, and his colleagues, with support from NIHCM research grants, have produced a series of papers examining the relationship between provider market power and private prices in a variety of scenarios. Among their findings:

  • Hospital prices are higher in markets where hospital ownership of physician practices is high.
  • In areas with the least competition among physician practices, prices for office visits and for common surgical and medical procedures are 8-26 percent higher than in areas with the most competition.

NIHCM’s new one-page Research Insights highlights the key takeaways from four published papers.