Higher Prices in Multispecialty Practices - New Research Insights

A new study is the first to show that primary care physicians’ and specialists’ fees are higher when they combine complementary services in a multispecialty practice (vertical integration). Prior research has focused on the higher prices that occur when physician practices integrate with hospitals.

The work, conducted by Laurence Baker, PhD, an economist, and colleagues from Stanford University, is unique in that it looks at the market impact of complementary physicians working together in a multispecialty practice.

Baker and colleagues found:

• That not only are physicians and specialists in integrated practices paid more by commercial insurers, this is especially true when their partner specialty within the practice has more market power.
• The higher prices in multispecialty practices are unlikely to reflect higher quality.

Along with prior work showing that physician/hospital integration raises prices in a given market, this new study offers an additional incentive for antitrust scrutiny of vertical integration among health care providers.