Mergers When Prices are Negotiated: Evidence from the Hospital Industry
50 Pages Posted: 9 Mar 2013 Last revised: 28 Jan 2023
Date Written: March 2013
Abstract
We estimate a bargaining model of competition between hospitals and managed care organizations (MCOs) and use the estimates to evaluate the effects of hospital mergers. We find that MCO bargaining restrains hospital prices significantly. The model demonstrates the potential impact of coinsurance rates, which allow MCOs to partly steer patients towards cheaper hospitals. We show that increasing patient coinsurance tenfold would reduce prices by 16%. We find that a proposed hospital acquisition in Northern Virginia that was challenged by the Federal Trade Commission would have significantly raised hospital prices. Remedies based on separate bargaining do not alleviate the price increases.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers
By Steven Berry and Philip A. Haile
-
Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers
By Steven Berry and Philip A. Haile
-
Empirical Industrial Organization: A Progress Report
By Liran Einav and Jonathan Levin
-
Identification in Differentiated Products Markets Using Market Level Data
By Steven Berry and Philip A. Haile
-
Identification in Differentiated Products Markets Using Market Level Data
By Steven Berry and Philip A. Haile
-
Identification in Differentiated Products Markets Using Market Level Data
By Steven Berry and Philip A. Haile
-
The Random Coefficients Logit Model is Identified
By Patrick Bajari, Jeremy T. Fox, ...