The Price Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction

Bureau of Economics Working Paper No. 293

30 Pages Posted: 17 Nov 2008  

Steven Tenn

Charles River Associates

Date Written: November 14, 2008

Abstract

We conduct a retrospective study of the Sutter-Summit hospital merger to assess whether antitrust enforcement in this matter was appropriate. This consummated merger combined two hospitals located close together in the Oakland-Berkeley region of the San Francisco Bay Area. The greater metropolitan area contained many other hospitals that offered a similar range of services, but which were located farther away. A central issue raised by the Sutter-Summit transaction was whether travel costs were low enough such that these hospitals were a sufficient constraint on the merging parties to prevent an anticompetitive price increase. We use detailed claims data from three large health insurers to compare the post-merger price change for the merging parties to the price change for a set of control group hospitals. Our results show that Summit's price increase was among the largest of any comparable hospital in California, indicating this transaction may have been anticompetitive.

Keywords: merger retrospective, hospital, competition

JEL Classification: L1, L41, I11

Suggested Citation

Tenn, Steven, The Price Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction (November 14, 2008). Bureau of Economics Working Paper No. 293. Available at SSRN: https://ssrn.com/abstract=1301575 or http://dx.doi.org/10.2139/ssrn.1301575

Steven Tenn (Contact Author)

Charles River Associates ( email )

1201 F Street, NW, Suite 700
Washington, DC 20004-1229
United States
202-662-3806 (Phone)
202-662-3910 (Fax)

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