June 08 Jun 08
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Slide Presentation (PDF)


Research Seminar Series: Laurence Baker

The Effects of Physician-Hospital Integration on Health Care Spending and Use

Integration between hospitals and physicians has been increasing in the U.S. as hospitals have purchased or formed close contractual relationships with physicians.  Hospital-physician integration could have positive or negative effects on health care delivery and costs.  We analyze whether physician practices that are vertically integrated with hospitals produce health care for Medicare patients at higher cost than non-integrated practices and whether there are differences in care utilization across these settings.   We use Medicare claims data from 2000-2014 for a 20% random sample of traditional (fee-for-service) Medicare beneficiaries.  We identify individuals who move from one Hospital Referral Region (HRR) to another, and identify those that switch from an office based practice to a hospital-integrated practice associated with the move.  Using event-study and difference-in-difference models, we investigate whether health care spending and use patterns differ between those who switch practice types and those who do not.  To address the potential for association between unobserved health status and the probability of switching practice type, we adopt an instrumental variables approach, instrumenting for switching practice types with the distribution of practice types (office-based vs integrated practices) in the “destination HRR.”   We find that switching to an integrated practice is associated with significantly higher health care spending after the switch, primarily associated with higher hospital and post-acute spending.  We consider implications for health policies that affect consolidation to improve efficiency of health care delivery.


Laurence Baker, PhD
Stanford University

Laurence Baker, Ph.D. is Professor in the Health Policy group and Bing Professor of Human Biology at Stanford University.  He is a health economist who uses applies economic and statistical analysis to study challenges facing the health care system.  Professor Baker has published widely and served as an advisor to the public and private sectors on a range of health care system and financing issues including the effects of financial incentives and provider organizational structure on the delivery of health care and health care spending, technological change in medicine, competition in health care markets, and managed care and insurance plans.

Professor Baker also holds appointments as Professor of Economics (by courtesy) at Stanford, Senior Fellow of the Stanford Institute for Economic Policy Research, and Research Associate of the National Bureau of Economic Research in Cambridge, MA.  He is a former Chair of the Department of Health Research and Policy at Stanford.  Professor Baker also directs the Stanford School of Medicine’s Scholarly Concentration and Medical Scholars programs.

Professor Baker is an elected member of the National Academy of Medicine and a recipient of the ASHE Medal from the American Society of Health Economists which recognizes the top American health economist under the age of 40.  He has also received the Alice S. Hersh Young Investigator Award from AcademyHealth and the National Institute for Health Care Management’s research prize.  He is Past President of the American Society of Health Economists, and previously served on the board of AcademyHealth and the International Health Economics Association.  Professor Baker received his Ph.D. in Economics from Princeton University in 1994 and his B.A. in Economics and Mathematics from Calvin College in 1990.