The Effect of Hospital/Physician Integration on Hospital Choice

The Effect of Hospital/Physician Integration on Hospital Choice

By
Laurence C. Baker, Mary K. Bundorf, Daniel P. Kessler
Journal of Health Economics. December
2016, Vol. 50, Pages 1-8

In this paper, we estimate how hospital ownership of physicians’ practices affects their patients’ hospital choices. We match data on the hospital admissions of Medicare beneficiaries, including the identity of their physician, with data on the identity of the owner of their physician’s practice. We find that a hospital’s ownership of a physician dramatically increases the probability that the physician’s patients will choose the owning hospital. We also find that patients are more likely to choose a high-cost, low-quality hospital when their physician is owned by that hospital.