As physician practices grow, so do prices for common high-cost procedures, according to a recent study published in Health Affairs.
Researchers from Stanford (Calif.) University found consolidation of physician practices leads to less competition and greater market power, which in turn may drive prices up for certain medical procedures.
"Our findings are consistent with the hypothesis that greater market power allows physicians to bargain for higher prices from private insurance companies," wrote authors Daniel Austin, MD, and Laurence Baker, PhD.
After comparing physician competition in 2010 to prices paid by preferred provider organizations for 15 common, high-cost procedures, Drs. Austin and Baker found practice concentration was associated with prices in 12 of the 15 procedures. In fact, in counties with the highest physician concentration, they found prices were 8 to 26 percent higher than in counties with the least concentration.
The study was unable to account for differences in quality, which may justify prices at larger physician organizations, according to the report.
However, the authors wrote, "The existence of an association between concentration and prices should underscore the importance of continued attention to the challenges posed by provider consolidation, especially given that consolidation among physician groups is likely to continue."
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