Stanford study: Medical procedures more expensive where physicians cluster in large medical practices
By Beth Duff-Brown
As more physicians move from solo and small practices, a dozen common medical procedures are becoming more expensive in areas where physicians are clustered into large medical practices, according to new research appearing in Health Affairs.
The study assessed the relationships between physician competition and prices paid by private organizations in 2010 for 15 common, high-cost procedures to determine whether high concentrations of physician practices and accompanying increased market power were associated with higher prices for services.
They found that prices were indeed 8 to 26 percent higher in the thousands of counties analyzed, with the highest average physician concentration compared to counties with the lowest. This was for 12 of the 15 procedures they examined, including colonoscopy with lesion removal, vasectomy, laparoscopic appendectomy and knee replacement surgery.
“Our findings are consistent with the hypothesis that greater market power allows physicians to bargain for higher prices from insurers,” wrote Dan Austin, MD, a graduate of Stanford’s medical school and a resident physician at the University of California, San Francisco, and Laurence Baker, PhD, chair of health research and policy at Stanford and a core faculty member at the Center for Health Policy and Center for Primary and Outcomes Research.
“We concluded that physician competition is frequently associated with prices,” they said. “Policies that would influence physician practice organization should take this into consideration.”
