Abstract

http://ssrn.com/abstract=2230765
 
 

References (39)



 
 

Citations (1)



 
 

Footnotes (36)



 


 



Mergers When Prices are Negotiated: Evidence from the Hospital Industry


Gautam Gowrisankaran


University of Arizona - Eller College of Management; National Bureau of Economic Research (NBER)

Aviv Nevo


Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Robert J. Town


University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

March 2013

NBER Working Paper No. w18875

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.

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Number of Pages in PDF File: 50

working papers series


Date posted: March 9, 2013  

Suggested Citation

Gowrisankaran, Gautam and Nevo, Aviv and Town, Robert J., Mergers When Prices are Negotiated: Evidence from the Hospital Industry (March 2013). NBER Working Paper No. w18875. Available at SSRN: http://ssrn.com/abstract=2230765

Contact Information

Gautam Gowrisankaran (Contact Author)
University of Arizona - Eller College of Management ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
HOME PAGE: http://econ.arizona.edu/faculty/gowrisankaran.asp
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Aviv Nevo
Northwestern University - Department of Economics ( email )
2003 Sheridan Road
Evanston, IL 60208
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert J. Town
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  39
Citations:  1
Footnotes:  36

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