Health Management, Policy and Innovation, Vol. 1 (2012)
28 Pages Posted: 19 Oct 2012
Date Written: August 20, 2012
This amicus brief was filed in Federal Trade Commission v. Phoebe Putney Health System, Inc., in which the FTC has obtained review of an 11th Circuit decision that insulated a merger of two nonprofit hospitals from antitrust scrutiny. We make two arguments in the amicus brief. First, there is no compelling theoretical basis for an antitrust exemption for nonprofit hospitals. That is, economic theory provides no determinate conclusions regarding whether nonprofits will exploit market power if given the opportunity. As a consequence, whether there is an economic basis for more favorable treatment of nonprofit hospitals is an empirical matter. Second, there is a strong consensus in empirical research that, in general, nonprofit hospitals do exploit their market power by raising prices. This empirical evidence on the exercise of market power by nonprofit hospitals strongly suggests that they should not be exempt from antitrust scrutiny. Such an exemption would serve the private interests of nonprofit hospitals to the detriment of consumers and society as a whole.
Suggested Citation: Suggested Citation
Black, Bernard S. and Dranove, David and Capps, Cory S. and Gaynor, Martin and Town, Robert J. and Bresnahan, Timothy and Cutler, David M. and David, Guy and Enthoven, Alain C. and Gowrisankaran, Gautam and Haas-Wilson, Deborah and Ho, Katherine and Lindrooth, Richard and Lo Sasso, Anthony T. and McGuire, Thomas G. and Nevo, Aviv and Parente, Stephen L. and Pauly, Mark V. and Philipson, Tomas and Reinhardt, Uwe and Satterthwaite, Mark and Van Horn, R. Lawrence and White, William and Yao, Dennis and Zwanziger, Jack, Brief of Amici Curiae Economics Professors in Federal Trade Commission v. Phoebe Putney Health System (U.S. Supreme Court) (August 20, 2012). Health Management, Policy and Innovation, Vol. 1 (2012). Available at SSRN: https://ssrn.com/abstract=2153979