Specialization and Differentiation in the Out-Patient Dialysis Market
Posted: 6 May 2012
Date Written: April 27, 2012
Abstract
Using a dataset of dialysis facilities operating in more than 1,000 U.S. counties in 2007, we examine the competition between two types of firms: multiproduct dialysis facilities and single product dialysis facilities. We simulate the effect of a Medicare policy proposal in 2008 which reduces the regulated price for a common product that is produced by both types. We find that the policy decreases the number of single product dialysis facilities but increases the number of multi-product facilities. We also find strong evidence for market segmentation between single product and multiproduct dialysis facilities. The estimates imply the cross-product subsidization within the multiproduct dialysis units.
Keywords: Dialysis, Entry, Competition
JEL Classification: L13, I11
Suggested Citation: Suggested Citation