Market Restructuring and Pricing in the Hospital Industry

40 Pages Posted: 13 Mar 2000

See all articles by Ranjani Krishnan

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems

Date Written: January 4, 2000

Abstract

This paper examines the price effects of recent hospital mergers and acquisitions. Using data from mergers and acquisitions that occurred in Ohio and California I examine post merger price changes at the level of individual services or Diagnosis Related Groups (DRGs). Results indicate that hospital mergers and acquisitions result in increased prices at the DRG level. Further, price increases are greater in DRGs where the merging hospitals gained substantial market power compared to DRGs where the merging hospitals did not gain significant market power. These results suggest that DRG specific market power plays an important role in a hospital's post-merger pricing strategy.

JEL Classification: D40, I11, L80

Suggested Citation

Krishnan, Ranjani, Market Restructuring and Pricing in the Hospital Industry (January 4, 2000). Available at SSRN: https://ssrn.com/abstract=205349 or http://dx.doi.org/10.2139/ssrn.205349

Ranjani Krishnan (Contact Author)

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-353-4687 (Phone)
517-432-1101 (Fax)

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