Over time, physicians are less likely to operate in solo or small group practices. In fact, the share of physician-owned practices has fallen below 50% in recent years. A key question then is how does a physician’s environment or the group they have join affect their practice patterns?
Previous research has found that a physician’s residency training and their local peers (i.e., physicians in the same hospital or in the same market) affect a physician’s propensity to opt for a C-section vs. vaginal birth (Epstein and Nicholson, 2009); another series of studies found when emergency-department doctors practice side by side, physicians perform worse when working with a faster or higher quality peer (Chan 2016; Saghafian et al. 2019). Further, a study of cardiologists who move geographic areas or hospitals found that 60%-80% of variation in regional catheterization rates are due to environment factors (e.g., hospital capacity, productivity spillovers; Molitor 2018) with hospital-specific effects being significantly more important than geography-specific effects.
Building on this research, a recent paper by Doyle and Staiger (2021) examines how physicians who switch group practices change their behavior. Using an approach similar to Molitor 2018, Doyle and Staiger use 2008-2016 Medicare claims data to examine how group treatment intensity–measured crudely by Medicare payments per quarter–affect an individual’s treatment intensity for individuals who have switched practices. They find that:
…internists who join more-intensive groups immediately increase their own treatment intensity, with an elasticity of approximately 0.3; the opposite is found for internists who switch to groups that are less intensive. This change in Medicare spending largely stems from greater quantities of care provided, with some evidence of a change in coding behavior. We do not detect a change in health outcomes, suggesting that treatment intensity induced by group affiliation may not be productive.
The authors do note that they find “suggestive evidence” that switching to a larger group practice is associated with a reduction in healthcare spending. Although not stated in the study, this could be because larger practices are more likely to participate in alternative payment models (APM), particularly CMS APM’s covering Medicare beneficiaries.