Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92487
Authors: 
Gowrisankaran, Gautam
Nevo, Aviv
Town, Robert
Year of Publication: 
2013
Series/Report no.: 
CSIO Working Paper 0122
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.
Subjects: 
Hospitals
Mergers
Bargaining
Oligopoly
Health Insurance
JEL: 
L11
L13
L31
L38
I11
I18
Document Type: 
Working Paper

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