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Market power and contract form: evidence from physician group practices
Robert Town1, Roger Feldman, John Kralewski
1Division of Health Policy and Management, School of Public Health, University of Minnesota, 420 Delaware St., S.E., Mayo Mail Code 729, Minneapolis, MN 55455, USA. rjtown@umn.edu
Abstract:
We examine how the market power of physician groups affects the form of their contracts with health insurers. We develop a simple model of physician contracting based on 'behavioral economics' and test it with data from two sources: a survey of physician group practices in Minnesota; and the physician component of the Community Tracking Survey. In both data sets we find that increases in groups' market power are associated with proportionately more fee-for-service revenue and less revenue from capitation.
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