Introduction

Managed care, a source of significant buying power, has had a substantial impact on markets in which health care providers operate. For example, buying power in the market for pharmaceuticals has led to discounts to the more powerful buyers. Hospital buying cooperatives can force down the price of essential supplies. Most prominently, however, physicians have seen their reimbursement rates fall and their practice autonomy erode. This final chapter in the monopsony in action series focuses on physicians and their responses to buying-side pressures. The topic is especially interesting because different state’s laws may affect this relationship differently, leading to varying economic outcomes.

In some instances, physicians have tried to join forces in order to negotiate collectively as a way of gaining some bargaining power. These efforts, however, have been thwarted by the antitrust laws, which forbid collaborative efforts that restrain trade. There is, of course, a specific antitrust exemption for labor unions, but most physicians do not qualify for the labor exemption because they are not employees. Instead, they are independent professionals who are largely self-employed. When physician groups are not horizontally integrated and have been formed simply to bargain with health insurers over reimbursement issues, they have been challenged by the antitrust authorities.