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Estimating the Impact of a Hospital Merger Using the Difference-in-Differences of Prices

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  • Gautam Gowrisankaran
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    Abstract

    This paper comments on "The Price Effects of Hospital Mergers: A Case Study of Sutter-Summit Transaction" by Steven Tenn. I exposit a simple model of differentiated products competition and consider the implications of Tenn's findings in the context of this model. I find that Tenn provides compelling evidence that the merger led to a price increase at Summit Hospital. The causes of the price increase and the welfare implications of the merger are less clear, particularly since anecdotal evidence suggests that quality increased at Summit Hospital post-merger. A difference-in-differences analysis using quality and quantity data can shed more light on the consequences of the merger.

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    File URL: http://www.tandfonline.com/10.1080/13571516.2011.542957
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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: 83-89

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    Handle: RePEc:taf:ijecbs:v:18:y:2011:i:1:p:83-89

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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 Mergers; Hospital Quality; Discrete Choice Models; Bertrand Equilibrium;

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    Cited by:
    1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.

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