Effect of Hospital-Physician Integration on Physician Compensation

Tuesday, June 25, 2019
Exhibit Hall C (Marriott Wardman Park Hotel)

Presenter: Christopher Whaley

Co-Authors: Daniel Arnold; Anupam Jena

For the first time, more physicians now work for a hospital or larger practice than own their own practice. While consolidation and hospital-physician integration has been linked to higher prices, little is known about the effects of health care market consolidation on physician compensation. We link 2014-2018 SK&A data on physician affiliation with data from Doximity, an online network for physicians, on physician compensation. Over this period, the share physicians working a hospital or health system increased by 31.3% for primary care physicians and 28.6% for specialists. We find that for primary physicians, affiliation with a hospital or health system is associated with a 5.9% increase in compensation. For specialists, we do not find any difference in compensation. Our results suggest that only a small portion of the documented increases in prices following hospital-physician integration pass through to physicians in the form of higher wages. Instead, physicians may be joining hospitals for non-financial reasons.