Physician Competition and the Provision of Care: Evidence from Heart Attacks

We study the impact of competition among physicians on service provision and patients’ health outcomes. We focus on cardiologists treating patients with a first-time heart attack treated in the emergency room. Physician concentration has a small but statistically significant effect on service utilization. A one-standard deviation increase in cardiologist concentration causes a 5 percent increase in cardiologist service provision. Cardiologists in more concentrated markets perform more intensive procedures, particularly, diagnostic procedures—services in which the procedure choice is more discretionary. Higher concentration also leads to fewer readmissions, implying potential health benefits. These findings are potentially important for antitrust analysis and suggest that changes in organizational structure in a market, such as a merger of physician groups, not only influences the negotiated prices of services, but also service provision.