Association between Physician Practice Prices and Health Care Quality

Provider consolidation has intensified concerns that providers with market power may be able to charge higher prices without having to deliver better care. Providers, on the other hand, have argued that higher prices cover the costs of delivering higher-quality care, and that integrated practices are better able to coordinate patients' care, thus providing long-run value to patients and health care payers. Due to the limited availability of data linking providers’ prices to measures of their quality of care, little prior research has rigorously examined whether higher provider prices are associated with better care, and most extant studies have focused on hospital, but not physician, prices. In this study, we examined the relationship between physician practice prices for outpatient services and the quality and efficiency of care provided to their patients. Using commercial claims, we classified practices as high-priced or low-priced relative to the average for their geographic area. We compared care quality, utilization, and spending between high-priced and low-priced practices in the same areas using data from the Consumer Assessment of Health Care Providers and Systems survey and linked claims for Medicare beneficiaries. Compared with low-priced practices, high-priced practices were much larger and received 36% higher prices. Patients of high-priced practices reported significantly higher scores on some measures of care coordination and management, but did not differ meaningfully in their overall care ratings, other domains of patient experiences (including physician ratings and access to care), receipt of mammography, vaccinations, or diabetes services, acute care use, or total Medicare spending. Where we did find an association between higher physician prices and higher quality, we found no evidence of continued improvements in quality associated with prices exceeding the average for a geographic area. These findings suggest an overall weak relationship between practices’ prices and their quality and efficiency of care, calling into question claims that high-priced providers deliver substantially higher-value care. Consequently, our findings cast substantial doubt on assertions that consolidation among health care providers -- which contributes to rising health care prices -- provides a net benefit to consumers by substantively improving the quality or value of care.