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Do Medicare's Facility Fees Incentivize Hospitals to Vertically Integrate with Oncologists?


ABSTRACT: Within the past decade, the U.S. health care market has undergone massive vertical integration, prompting economists to study the underlying causes and consequences of hospital-physician integration. This paper examines whether or not hospitals strategically choose to vertically integrate with clinical oncologists in order to capture facility fees, a commonly cited reason for increased consolidation in the health care market. To address this question, I match data on hospitals' ownership of clinical oncologists with Medicare payment data disaggregated to the physician and specific service level. I leverage a 2014 policy change that drastically altered the payment structure of Medicare's facility fees paid to hospitals for evaluation and management services-and yet, it did not alter the direct payments made to physicians. Contrary to popular belief, I find no evidence that the financial incentives of facility fees have an effect on the probability that a hospital and a clinical oncologist vertically integrate.

SUBMITTER: Valdez S 

PROVIDER: S-EPMC8287339 | biostudies-literature |

REPOSITORIES: biostudies-literature

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