State law

Marketing

Algorithm

Microeconomics

Economics

Market economy

Computer science

Business

Private practice

Monetary economics

Economies of scale

Family medicine

Welfare

Medicine

State (computer science)

American Economic Journal Applied Economics

We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreements (NCAs) causes 4.3 percent higher physician prices, and declines in practice sizes and concentration. Using two databases containing every physician establishment and firm between 1996 and 2007, linked to negotiated prices, we show that larger practices have lower prices for services with high fixed costs, consistent with economies of scale. In contrast, increases in firm concentration conditional on establishment concentration leads to higher prices. (JEL D24, G22, I11, J44, K22, L13)

Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes