Competition and medical groups. A survivor analysis.

This paper extends the survivor analysis of medical practice provided by Frech and Ginsburg (1974). Changes in the distribution of medical practice sizes are examined for the periods 1965-69, 1969-75, and 1975-80. Through 1975, we find that, almost uniformly, all sizes of medical groups were found to be optimal. In particular, the optimality of large (100 or more physicians) multi-specialty groups was strongly confirmed. Later data, however, suggest that the equilibrium size distribution may have shifted. For the 1975-80 period only large multi-specialty groups continue to be in the optimal size range. In addition, we find some evidence that suggests that solo practices may be optimal in some geographic regions.