Less Competition Among Docs Equals Higher Medical Costs

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Less Competition Among Docs Equals Higher Medical Costs
Less Competition Among Docs Equals Higher Medical Costs

(HealthDay News) — Competition between medical practices helps keep health care costs lower, according to a study published in the Oct. 22/29 issue of the Journal of the American Medical Association.

Researchers examined the average prices paid by preferred provider organizations (PPOs) for patient visits to medical practices in 1,058 counties in all 50 states in 2010. When there was less competition, medical practices charged more for services. Those in areas with the least competition charged an average of 3.5–5.4% more for patient visits than those in areas with the most competition.

Privately insured patients spent nearly $250 billion on physician services in 2011, so these higher charges could translate to tens of billions of dollars of extra spending, the researchers noted. They also found that prices at medical practices increased more rapidly between 2003–2010 in areas with less competition.

"The research comes out of trying to understand some dramatic changes that have occurred in the health care system over a couple of decades," lead author Laurence Baker, PhD, a professor of health research and policy at the Stanford University School of Medicine in California, said in a university news release.

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