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Players behind the scenes: common ownership in the hospital industry

Author

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  • Mengde Liu

    (Beijing Institute of Technology, Beijing)

  • Lu Yao

    (China University of Political Science and Law)

Abstract

Publicly traded firms being held by common owners may affect product prices set by these firms. Common ownership usually refers to a scenario when a few competing firms from the same industry and competing firms are also held by large common owners. Previous literature has studied the anticompetitive effects of common ownership in a few industries. In this paper, we use comprehensive data on 6200 hospitals in the U.S. from the American Hospital Association, Healthcare Cost Report Information System, and Wharton Research Data Services, and we test whether the presence of common ownership in the hospital industry affects hospitals’ charges. We find that common ownership in the hospital industry has anticompetitive effects on hospital prices. Our estimates are also robust to controlling for other compounding effects and under a range of alternative specifications of the model. Specifically, both lagged regressions and difference-in-differences strategies yield statistically significant positive impacts of common ownership on hospital prices, while economic magnitudes of the difference-in-differences results are much larger with more observations in analysis.

Suggested Citation

  • Mengde Liu & Lu Yao, 2024. "Players behind the scenes: common ownership in the hospital industry," Empirical Economics, Springer, vol. 66(5), pages 2277-2309, May.
    • Handle: RePEc:spr:empeco:v:66:y:2024:i:5:d:10.1007_s00181-023-02519-2
    DOI: 10.1007/s00181-023-02519-2
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    More about this item

    Keywords

    Common ownership; Healthcare industry; Hospital charges; Anticompetitive effects;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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