Making Sense of the Physician Market

Sixteen months after my first-ever visit with an in-network dermatologist, I now know why it took 11 months to get an appointment with him in the first place.

I found the answer in a Federal Trade Commission (FTC) report released by the agency in March. (Shout out to one of my LinkedIn connections who mentioned it. Absent the mention, no way I would have ever known about it.) The report is called “An Atlas of U.S. Physician Practice Choice and Firm Structure: 2015-2020, for Selected States from the FTC Physician and Facility Merger Study.”

It’s a long report — 75 pages — with a long name. But the question the report tries to answer is simple: How competitive are physician markets by specialty and location?

If you know me, you know that I believe that robust competition on a level playing field will cure just about any access, cost and quality malady consumers face when dealing with our healthcare system.

To answer the question, FTC researchers analyzed claims for outpatient care provided by 30 different medical specialties to more than 50 million commercially insured patients in 15 states over a six-year period, 2015 through 2020. Using some fancy antitrust math, they calculated the percentage of highly concentrated, i.e., less competitive, markets by specialty and location for 2018.

In theory, and in reality as experienced by patients everywhere, consumers have less choice of who to see for what in highly concentrated markets, and they have to wait longer to see that medical specialist for whatever ails them.

As it turns out, 100% of the markets for six medical specialties were highly concentrated in 2018. That means those specialties had some but not much competition from others in the same specialty. The six specialties were: critical care (intensivists), geriatric medicine, hematology/oncology, interventional cardiology, radiation oncology and rheumatology.

The three medical specialties with the lowest percentage of highly concentrated markets in 2018 were: psychiatry (7%), primary care (18%) and ophthalmology (27%). In other words, those specialties in most markets faced more competition. That’s good for consumers.

But what about dermatology? My answer was in Table 2 on page 15 of the FTC’s report. That chart on that page broke down the percentage of highly concentrated medical specialties by location: metro (urban), non-metro adjacent (suburban) and non-metro non-adjacent (rural).

I live 30 miles due west of Chicago in Wheaton, Illinois. That puts me in the non-metro adjacent (suburban) category in the FTC’s analysis. That’s where 78% of the markets for dermatologists in 2018 were highly concentrated. That means my dermatologist has little competition for his services. Hence, the 11-month wait to get an appointment with him.

The larger takeaway, again, is that healthcare is an industry like any other industry. Businesses in healthcare, like physician practices, are like businesses in any other industry. They all respond and react the same way to the same economic incentives and market dynamics.

If we want to build better healthcare, fix the economic incentives and market dynamics.

Thanks for reading.