Hospital consolidation and negotiated PPO prices.
We examine the effects of hospital consolidation on the actual prices paid by preferred provider organizations. We find that price increases following consolidations among nearby hospitals invariably equaled or exceeded median price increases among other hospitals in the same market. Using multivariate regression analysis, we find that consolidation enables hospitals to increase prices in three of the four markets studied; these increases are generally statistically significant. In the remaining market, the measured effect was zero. Our results suggest that some, but not all, consolidations of competing hospitals facilitate price increases. We conclude that antitrust scrutiny of hospital consolidation is warranted.
Capps
Cory
C
Kellogg School of Management, Northwestern University, Evanston, Illinois, USA. c-capps@kellogg.northwestern.edu
Dranove
David
D
D004465:Economic Competition; D004469:Economics, Hospital; D017008:Negotiating; D011243:Preferred Provider Organizations / Q000191:economics*; D014481:United States