Frederik Plesner Lyngse, University of Copenhagen & Danish Ministry of Health

"Collusion among Specialist Physicians: Evidence from Narrative and Administrative Data"

Abstract

How to contain the growing healthcare costs is a recurring discussion for policymakers and scholars. I exploit a policy change that introduced cost-control incentives in provider contracts for independent physician clinics providing services to public patients in Denmark that introduced incentives for collusion among the physician clinics. Using data from an antitrust raid, I document the internal organization of a trade industry organization colluding by dividing the market according to firm-specific quotas. They enforce the quotas by sending out e-mails calling for a production reduction in order to keep public reimbursement fees as high as possible. Further, using Danish administrative register data, I leverage the e-mails sent by trade industry organizations to independent firms as an event to investigate how the firms respond to these calls for reducing production. I show that physicians respond to these e-mails by decreasing production of public patients — both in revenue and number of patients treated. I further demonstrate spillovers in the form of increased treatment of private patients fully offsetting the production decrease of public patients. My results show the importance of firm-level monitoring for collusion.

Contact person: Johan Lagerlöf