Measuring and Modeling Health Care Costs

Ana Aizcorbe, Colin Baker, Ernst R. Berndt, David M. Cutler, Ana Aizcorbe, Colin Baker, Ernst R. Berndt, David M. Cutler

• Publisher: University of Chicago Press
• Year: 2018
• Print ISBN: 9780226530857
• eBook ISBN: 9780226530994
• Topic: Business
• Subtopic: Business General
• Index: Business

Health care costs represent a nearly 18% of U.S. gross domestic product and 20% of government spending. While there is detailed information on where these health care dollars are spent, there is much less evidence on how this spending affects health. 
           
The research in Measuring and Modeling Health Care Costs seeks to connect our knowledge of expenditures with what we are able to measure of results, probing questions of methodology, changes in the pharmaceutical industry, and the shifting landscape of physician practice. The research in this volume investigates, for example, obesity's effect on health care spending, the effect of generic pharmaceutical releases on the market, and the disparity between disease-based and population-based spending measures. This vast and varied volume applies a range of economic tools to the analysis of health care and health outcomes.

Practical and descriptive, this new volume in the Studies in Income and Wealth series is full of insights relevant to health policy students and specialists alike.

IV

Issues in Industrial Organization and Market Design

11

Measuring Physician Practice Competition Using Medicare Data

Laurence C. Baker, M. Kate Bundorf, and Anne Royalty

11.1 Introduction

Questions about the market structure of physician practices have grown increasingly prominent in contemporary health policy discussions. Market forces over the last couple of decades appear to have favored the growth of larger multispecialty groups, and more and more physicians seem to prefer the practice environment of larger groups to solo or smaller group practices, generating growth in the size of practices and horizontal merger activity (Liehaber and Grossman 2007). Growing vertical integration in health care delivery markets, such as through hospital purchase of physician practices (Kocher and Sahni 2011; O’Malley, Bond, and Berenson 2011), may in some cases effectively increase horizontal integration of practices as well as change vertical market dynamics.

These changes could have a number of important effects (Gaynor and Town 2012). Larger practices could lead to improvements in health care quality and outcomes by improving coordination—patients of organizations with a broader scope and more resources may benefit from things like better information systems, care organization activities, and investments in better infrastructure (Ketcham, Baker, and MacIsaac 2007). At the same time, larger practices may be more difficult to effectively manage and more challenging for patients to navigate and, if inefficient, could drive higher costs of care. Larger practices may also increase the amount of concentration in health care markets. If practices gain market power, they may drive prices higher and quality lower (Schneider et al. 2008; Berenson and Ginsburg 2010; Ginsburg 2010; Gaynor 2011; Berenson et al. 2012; Dunn and Shapiro 2014). Hospital acquisition of practices may independently affect prices paid for care (Cuellar and Gertler 2006; Gaynor 2011).

Understanding the impact of changes in physician market structure would help interpret changes in utilization and prices for health care services over recent years. It may also be important for developing policies going forward, with efforts to promote the integration of care delivery at the center of prominent policy efforts to grapple with rising costs (C...

Table of contents

• Cover
• Copyright
• Title Page
• National Bureau of Economic Research
• Relation of the Directors to the Work and Publications of the National Bureau of Economic Research
• Contents
• Prefatory Note
• Introduction
• I. Methodological Issues in Measuring Health Care Costs and Outcomes
• II. Analyses of Subpopulations and Market Segments
• III. Prescription Pharmaceutical Markets
• IV. Issues in Industrial Organization and Market Design
• V. Potpourri
• Contributors
• Notes
• Author Index
• Subject Index