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

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  • Steven Tenn
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    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.

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    File URL: http://www.tandfonline.com/10.1080/13571516.2011.542956
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal International Journal of the Economics of Business.

    Volume (Year): 18 (2011)
    Issue (Month): 1 ()
    Pages: 65-82

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    Handle: RePEc:taf:ijecbs:v:18:y:2011:i:1:p:65-82

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    Web page: http://www.tandfonline.com/CIJB20

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    Web: http://www.tandfonline.com/pricing/journal/CIJB20

    Related research

    Keywords: Hospital; Merger; Antitrust;

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    Cited by:
    1. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    2. Ron Kemp & Nikki Kersten & Astrid Severijnen, 2012. "Price Effects of Dutch Hospital Mergers: An Ex-post Assessment of Hip Surgery," De Economist, Springer, vol. 160(3), pages 237-255, September.
    3. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
    4. Orley C. Ashenfelter & Daniel Hosken & Matthew C. Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," NBER Working Papers 19939, National Bureau of Economic Research, Inc.
    5. Martin Gaynor & Kate Ho & Robert Town, 2014. "The Industrial Organization of Health Care Markets," NBER Working Papers 19800, National Bureau of Economic Research, Inc.

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