Comparing Measures of Physician Market Concentration Using Tax Identification Numbers Versus Independent Negotiating Units

• Date: 01 March 2019
• Author: Scott Ode,Bryan Dowd,Roger Feldman
• DOI: 10.1177/0003603X18822609
• Published date: 01 March 2019
• Subject Matter: Articles

Article

Comparing Measures of Physician

Market Concentration Using

Tax Identification Numbers

Versus Independent

Negotiating Units

Scott Ode*, Bryan Dowd**, and Roger Feldman**

Abstract

Analysts interested in physician market concentration often have access to tax identification numbers

(TINs), but not the number of truly independent negotiating units (NUs). Health plans do know the

true number of NUs, and, using 2014 claims data for Minnesota physicians from a large midwestern

health plan, we compare Herfindahl-Hirschman Index (HHI) measures of physician market concen-

tration using TINs versus NUs at the county and metropolitan statistical area (MSA) levels for thirteen

specialties. We found that HHIs computed using TINs versus NUs were similar across Minnesota. Two

MSAs in Minnesota met the Department of Justice’s definition of highly concentrated markets. There is

reason to believe that the discrepancy between TIN and NU HHIs may vary by insurance product and

region of the country, and so we encourage other researchers to work with health plans to replicate

our study.

Keywords

physician, consolidation, markets

I. Introduction

Market concentration and the resulting pricing power of physicians and hospitals are growing

concerns. Increased pricing power results not only in higher unit prices

1

but also increases

*Mathematica Policy Research, Minnetonka, MN, USA

**Division of Health Policy and Management, University of Minnesota, Minneapolis, MN, USA

Corresponding Author:

Bryan Dowd, PhD, Professor, Division of Health Policy and Management, School of Public Health, University of Minnesota, Box

729 MMC, Minneapolis, MN 55455, USA.

Email: dowdx001@umn.edu

1. See A. Dunn & A.H. Shapiro, Do Physicians Possess Market Power? 57 J. LAW.ECON. 159–93 (2014); E.T. Roberts, M.E.

Chernew, & J.M. McWilliams, Market Share Matters: Evidence of Insurer and Provider Bargaining Over Prices,36H

EALTH

The Antitrust Bulletin

2019, Vol. 64(1) 128-135

ªThe Author(s) 2019

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0003603X18822609

journals.sagepub.com/home/abx