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Is the impact of managed care on hospital prices decreasing?

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  • Dranove, David
  • Lindrooth, Richard
  • White, William D.
  • Zwanziger, Jack

Abstract

Prior studies find that the growth of managed care through the early 1990s introduced a strong positive relationship between price and concentration in hospital markets. We hypothesize that the relaxation of constraints on consumer choice in response to a "managed care backlash" has diminished the price sensitivity of demand facing hospitals, reducing or possibly reversing the price-concentration relationship. We test this hypothesis by studying the price/concentration relationship for hospitals in California and Florida for selected years between 1990 and 2003, while addressing the potential endogeneity of concentration. We find an increasingly positive price/concentration in the 1990s with a peak occurring by 2001. Between 2001 and 2003, the growth in this relationship halts and possibly reverses.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 2 (March)
Pages: 362-376

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Handle: RePEc:eee:jhecon:v:27:y:2008:i:2:p:362-376

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Web page: http://www.elsevier.com/locate/inca/505560

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  1. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
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Cited by:
  1. Martin Gaynor & Robert J Town, 2012. "Competition in Health Care Markets," The Centre for Market and Public Organisation 12/282, Department of Economics, University of Bristol, UK.
  2. Abe Dunn & Adam Hale Shapiro, 2012. "Physician Market Power and Medical-Care Expenditures," BEA Working Papers 0084, Bureau of Economic Analysis.
  3. Eila Kankaanpää & Ismo Linnosmaa & Hannu Valtonen, 2011. "Public health care providers and market competition: the case of Finnish occupational health services," The European Journal of Health Economics, Springer, vol. 12(1), pages 3-16, February.

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