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Peter R. Orszag

When Hospitals Buy Doctor Practices, Do Prices Always Rise?

New research says not necessarily — it’s still too soon to tell. 

Is it more expensive if she works for the hospital?

Is it more expensive if she works for the hospital?

Photographer: Joe Raedle/Getty Images

What happens when physicians are employed by hospitals, rather than working independently? Over the past decade, the share of doctors practicing on their own has declined markedly. Many antitrust advocates are concerned that nothing good will happen as a result, and the Federal Trade Commission is studying the situation. But new research suggests that the shift may bring more benefits than expected, at least for specialist doctors.

A broader debate is raging over the costs and benefits of “vertical integration,” which in health care means a single entity exercising more financial and operational responsibility for care. In 2020, when I and my colleague Rahul Rekhi laid out the case that such integration might help lower costs and improve the quality of care, we did not specifically examine doctors working for hospitals or groups owned in part or whole by hospitals. And concern has grown about that type of vertical integration in particular.