The Effects of Multispecialty Group Practice on Health-Care Spending and Use

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Primary care physicians in the United States are increasingly joining multispecialty group practices, such as the Palo Alto Medical Foundation and Stanford Health Care.

Stanford Health Policy’s Loren Baker and Kate Bundorf analyzed how a physician’s single practice vs. a multispecialty practice (MSP) affects health-care spending and use.

Focusing on Medicare beneficiaries who changed their primary care physician due to a geographic move, they compared changes in practice patterns before and after the move between patients who switch practice types and those who do not.  

With their co-author Anne B. Royalty of Indiana University-Purdue University Indianapolis, they found that changing from a single to a multispecialty primary care group practice decreases annual Medicare-financed, per-capita expenditures by about $1,600, or a 28% reduction.

“The effect is driven primarily by changes in hospital expenditures and is concentrated among patient with two or more chronic conditions, suggesting that MSP improves care delivery by reducing hospitalizations among relatively sick patients,” they wrote in their working paper published by the National Bureau of Economic Research.

“The results imply that, while research has shown the potential for physician consolidation to increase prices in some settings, large multispecialty groups also have the potential to lower costs.” 

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