Association between Market Concentration of Primary Care Physician Practices and the Characteristics of Usual Source of Care Providers and Patient Care

Primary care physician markets in the U.S. have rapidly become more concentrated in recent years mainly due to healthcare systems purchasing medical groups via vertical integration. Such integration can potentially increase the quality and efficiency of healthcare delivery if vertically integrated practices can achieve better coordination of care. However, lack of competition among physician practices could lead to lower quality and higher costs of care.

In this study, we explore how the market concentration of primary care physician practices is associated with patient care and with provider characteristics. To address possible endogeneity of market concentration measures, we create a simulated Herfindahl-Hirschman Index (HHI) of the primary care physician market from the 2015 IQVIA SK&A data and the 2015 Medical Expenditure Panel Survey (MEPS) Medical Organization Survey (MOS) data, following the method of Kessler and McClellan (2000). We further construct a willingness to pay (WTP) measure of medical group market power, using a random utility model, and a multi-market contact measure.

We merge the market measures to patient-level data from 2015 MEPS Household Component (HC) and provider-level data from MEPS-MOS. MEPS-HC is a survey of a representative sample of the U.S. noninstitutionalized civilian population administered by the Agency for Healthcare Research and Quality (AHRQ) and collects detailed information for each person in the household. MEPS-MOS is a survey of office-based usual source of care providers seen by the 2015 MEPS-HC respondents. This additional survey was funded by the Robert Wood Johnson Foundation and administered by AHRQ as a part of the MEPS Medical Provider Component. The patient-level outcomes used in this study include Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures, such as global rating of health care and the measures of patient-provider communications and access to care, designed to capture quality of care from the consumer’s perspective. The provider-level outcomes include measures of quality-enhancing efforts and technology adoption.

We estimate ordered logit models (or logit models depending on outcomes), controlling for HHIs of hospitals and insurers obtained from American Hospital Association (AHA) and Interstudy data, respectively, provider characteristics obtained from MEPS-MOS, and market characteristics obtained from Area Resource Files. We further control for detailed demographic and socioeconomic characteristics, health conditions, and health insurance coverage in the analysis of patient-level outcomes. Regressions employ MEPS survey weights, and standard errors account for the complex survey design of the MEPS.

Our preliminary results indicate that patients’ global rating of health care is higher when system-level market concentration is high and also when their provider has more market power. Our findings suggest that higher prices in more concentrated and vertically integrated markets found in the previous literature might at least partially reflect higher quality of care provided by larger providers and vertically integrated systems.

While increasing concentration in healthcare markets has been of concern to policymakers, research on the effects of physician market concentration on quality is limited. Our study provides new insights into the association between primary care physician market concentration and the characteristics of patient care and providers.