Healthy Competition Can Reduce Healthcare Costs

The study, published in JAMA, evaluates the impact of the a decrease in single-physician practices as doctors prefer to join larger healthcare organizations.

An examination of the relationship between physician competition and prices paid by private preferred provider organizations (PPOs) for common office visits finds that more competition is associated with lower prices paid to physicians in 10 large specialties, according to a study in the October 22/29 issue of JAMA.

Physicians are increasingly moving away from solo and smaller practices toward larger organizations. These changes may be beneficial if larger practices with more resources are better able to coordinate care, adopt process improvements, increase use of information technology, or take other actions that improve quality of care. At the same time, a trend toward fewer and larger groups could increase what economists refer to as “market concentration,” resulting in fewer practices facing less competition and with greater economic power. This in turn could lead health plans to pay higher prices for physician services. However, there is little evidence on the relationship between competition and prices paid for physician services, according to background information in the study.

Read the complete JAMA press release:

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