Physician Consolidation and Incentives in Childbirth

University Of Pennsylvania, Philadelphia PA

Investigators

Abstract

Project Summary The resurgence of physician practice management companies (PPMCs) has contributed to increasing physician consolidation across the United States. PPMCs unify practices under a single entity that provides business services and negotiates higher reimbursement rates with insurers but differ by organizational form. Despite their ability to influence physician behavior, data challenges have limited empirical research. Using novel data on Obstetricians and Gynecologists (Ob-Gyns) from Florida, this is the first paper to empirically estimate the impact of PPMCs on health care provision and patient outcomes. An Ob-Gyn's main treatment decision in childbirth is between C-section and vaginal birth, where C-sections are typically more highly reimbursed and more convenient (less time-intensive) than vaginal births. C-sections can also pose risks to maternal and infant health when not medically necessary. The effect of physician practice consolidation on health care provision is theoretically ambiguous. In this context, PPMCs could increase C-sections by increasing reimbursement rates relative to traditional private practice. Alternatively, PPMCs could reduce C-sections of convenience by increasing time spent with patients through efficiencies in practice management and improved care coordination. To determine the impact of this trade-off on C-sections, this analysis uses hand- collected data on three PPMCs in Florida linked to inpatient discharge records from 2006 to 2014 and physician survey data. The analysis for each aim described below measures C-sections for low-risk, first-time mothers and the associated impact on maternal and infant health outcomes. The first aim of this paper is to estimate physician-level changes in the C-section decision after joining a PPMC. To identify this effect, the empirical analysis estimates difference-in-differences models by exploiting the staggered entry of practices into each PPMC. Then, variation in the organizational form of the PPMCs is used to distinguish between financial and organizational process mechanisms. The second aim of this paper is to estimate market-level changes in C-sections following the rapid growth of PPMCs. The regression estimation uses variation in the mean Herfindahl-Hirschman Index of physician practices within a hospital referral region to measure market concentration. The long-term objective of this paper is to improve the quality of care for women and infants, in addition to making health care delivery more efficient and affordable. This objective is reached by providing new evidence on organizational factors influencing treatment decisions in childbirth. More generally, PPMCs will have broader practice impacts on health care delivery across multiple specialties. as they continue to replace traditional forms of private