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Economies of Scale in Physician PracticeThe Center for Health Economics Research
The Center for Health Economics Research A potentially important source of productivity gains in physician practices is larger practice size. We investigate economies of scale in physician practices using a large nationwide survey of self-employed physicians. When output is measured by practice revenues, we estimate significantly increasing returns to scale for single-specialty practices, implying that forming larger practices lowers costs. The lowest-cost practice size is estimated to be 5.2 physicians compared to a sample average size of 2.4 physicians. On average, scale inefficiency is estimated at 9%. Measuring output by physician office visits, we find that group physicians provide 17% more office visits than solo practitioners, controlling for practice inputs, and physician and practice characteristics. Physicians practicing in mid-sized groups of three to four are the most productive, providing 21% more visits than solo, Physicians. If all physicians practiced in the most productive group size, average office visit productivity would rise by 13%.
Medical Care Research and Review, Vol. 53, No. 4,
417-440 (1996) This article has been cited by other articles:
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