This dissertation consists of three essays Essay 1 In recent years, the physician practice landscape has been characterized by a shift away from small, single specialty physician practices and towards larger, more integrated providers. Responses to this trend have been mixed, with some hailing it as a cost saving cure-all and others warning about the dangers of increased market power and the potential for anti-competitive behavior. This trade-off has been debated by health care professionals, economists and government agencies in boardrooms, academia and courts. The discussion of integration has been impeded by a failure to carefully define terms and distinguish between two distinct components of integration: administrative and behavioral. Administrative, or financial, integration happens when providers merge, or hospitals purchase physician practices. This type of integration is associated with increased bargaining power and higher reimbursements. Furthermore, through profit sharing, financial integration can create an incentive for providers to refer patients to other specialists for more tests or more care, some of which may be unnecessary. In contrasts, behavioral integration refers to doctors working together and coordinating care. It has been associated with decreased waste and more efficient care. Previous work has often used measures of administrative integration, such as the share of physician practices owned by hospitals, to proxy for behavioral integration. Those modeling decisions are understandable as, up to this point, a metric which separately captures behavioral integration in a systematic way has not existed. The lack of a metric has been a hurdle to evaluating these two components separately. In this paper, I use Medicare data on physician patient sharing patterns to develop metrics that capture physician practice integration at the behavioral level. I compare these behavioral integration metrics to a more standard organizational level integration metric. The low correlation, only 0.30, demonstrates that these metrics are distinct. Using all these metrics, I examine the impact of these two types of physician integration on the utilization of medical care. With national data over time, I use changes in integration and utilization within regions to estimate how the different types of integration impact the ability to provide quality care at a low cost, which I refer to as efficiency. As a model of physician behavior predicts, I find that behavioral integration reduces cost while improving quality. In contrasts, financial integration appears to increase cost without having an impact on quality. These results are robust to different measures of behavioral integration and different identification strategies. Essay 2 When health care providers and managed care organizations (MCOs) bargain, the main tool providers have is the threat to refuse to be in the MCO’s network. In fact, anecdotal evidence indicates that a major mechanism that practices employ to maximize profits in the face of differing insurer reimbursements, limited capacity and stochastic demand is to choose insurers discriminately. Providers do not accept patients from every MCO, however, providers do not exclusively accept the most profitable MCO. In this paper, I apply these institutional facts to a Nash cooperative bargaining framework to develop a bargaining model that explicitly models the provider’s disagreement point with the MCOs. In doing this, I am able to solve analytically [Don’t split infinitives] for the interdependence of prices between MCOs and add to previous bargaining models by making the value of a MCO to a provider more explicit. This model shows the impact of MCO market structure on prices. By introducing provider capacity constraints, I am able to model two important provider-side considerations: the risk capacity will be unused, and the risk that a low-paying patient will displace a higher-paying patient. Neither of these two effects have been previously captured in the bargaining literature, which typically has featured marginal costs as the limiting factor for providers contracting with MCOs. I also show how predictions in my model match empirical observations and estimates from other work. I demonstrate a strong negative association between MCOs’ market power and negotiated prices, and show that the degree of market level price differences predicted by this model is similar to what has been observed. Finally, recent empirical work has found that that price increases for Medicare are positively associated with private MCOs’ prices and that this impact is stronger in areas with more concentrated insurers, and areas in which Medicare patients represent a larger share of the market. My model analytically makes these predictions and can explain the underlying mechanisms. Essay 3 This paper examines how primary care providers (PCPs) change their referral patterns to specialists after they join a Medicare Shared Savings Program Accountable Care Organization (ACO). We find that primary-care providers respond differently to ACO formation depending on the degree to which the providers have a pre-existing relationship with specialists in the ACO. Relatively speaking, the smaller the previous PCP-specialist relationship, the bigger the response. We also find that primary-care providers without a pre-existing relationship with ACO specialists make up a large share of the ACOs PCPs and referrals. PCPs that sent a large share of referrals to specialists that join an ACO in the years prior to ACO formation decrease the number of patient they refer to those specialists.