Vertical Alignment between Hospitals and Physicians as a Bargaining Response to Commercial Insurance Markets

49 Pages Posted: 2 Jun 2015 Last revised: 27 Apr 2016

See all articles by Ian M. McCarthy

Ian M. McCarthy

Emory University - Department of Economics

Sean Shenghsiu Huang

Georgetown University

Date Written: March 3, 2016

Abstract

The relationship between physicians and hospitals has dramatically changed over the last decade, with the employer-employee model supplanting the traditional model of private physicians with hospital admitting privileges. We examine the motivation for this form of vertical integration by considering physician-hospital alignment as a tool to increase bargaining power with private insurers. We find a positive and significant effect of private insurance concentration on physician-hospital alignment, with larger effects among for-profit hospitals and in counties with multiple hospitals.

Keywords: Healthcare market structure, Hospitals, Physicians, Bargaining, Vertical integration

JEL Classification: I11, L22

Suggested Citation

McCarthy, Ian M. and Huang, Sean Shenghsiu, Vertical Alignment between Hospitals and Physicians as a Bargaining Response to Commercial Insurance Markets (March 3, 2016). Available at SSRN: https://ssrn.com/abstract=2612879 or http://dx.doi.org/10.2139/ssrn.2612879

Ian M. McCarthy (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

Sean Shenghsiu Huang

Georgetown University ( email )

Washington, DC 20057
United States

HOME PAGE: http://seanhuang.org

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