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Please use this identifier to cite or link to this item: http://arks.princeton.edu/ark:/88435/dsp01vx021h45x
Title: HOSPITAL ACQUISITIONS OF PHYSICIAN PRACTICES: AN EMPIRICAL STUDY OF THEIR EFFECTS ON THE INTENSITY, COST, AND QUALITY OF MEDICAL CARE
Authors: Downing, William Michael
Advisors: Brunnermeier, Smita B.
Department: Economics
Class Year: 2015
Abstract: Physicians have traditionally been privately practicing, self-employed entrepreneurs with privileges or contracts with hospitals, which allow them to use hospitals’ capital on a risk-free basis while running their personal practices. However, in the face of increasing developments in healthcare policy, hospitals and physicians have been searching for ways to consolidate their operations in order to operate more efficiently and, hopefully, improve care quality as well. These integration efforts have included joint ventures, participating bond transactions, physician-hospital organizations, hospital employment of physicians, and more. In recent years, the most substantial form of integration has occurred through hospital acquisitions of physician practices as hospitals have been buying out physicians and integrating them as salaried staff members in an attempt to optimize their operations. In 2013 alone, acquisitions of physician practices increased the proportion of physicians employed in hospitals from 23% to 26% and, as of 2011, the hospital-based physician market was estimated to be worth over $77 billion (Burdyk, 2014). This study seeks to analyze the effects of these acquisitions on patient treatment, hospital costs, and quality of care. For its economic analysis, this study used a panel data set from the HCUP Nationwide Inpatient Sample and the American Hospital Association’s Annual Survey of Hospitals from 2008 and 2011. Analyses were conducted using hospital and year fixed effects models to identify within-hospital effects of physician practice acquisitions. The results from these studies indicate that hospital acquisitions of physician practices allow hospitals to realize substantial and significant cost synergies. Hospitals that did not previously employ physicians and those that made large acquisitions were able to achieve the largest and most significant costs savings, and these results were robust to several verifications. Results also indicated that these acquisitions can help reduce unnecessary procedure use and may help increase care quality, although these results were only valid for certain specifications. Future researchers should consider the effects of acquisitions of different types of physician practices as well as the long-term effects of these acquisitions.
Extent: 107 pages
URI: http://arks.princeton.edu/ark:/88435/dsp01vx021h45x
Type of Material: Princeton University Senior Theses
Language: en_US
Appears in Collections:Economics, 1927-2016

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