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The Effect of Hospital Mergers on Inpatient Prices: A Case Study of the New Hanover-Cape Fear Transaction

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  • Aileen Thompson
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    Abstract

    The Federal Trade Commission initiated a Hospital Merger Retrospective Project in 2002 to analyze the effects of consummated mergers. One of the mergers studied was the 1998 acquisition by New Hanover Regional Medical Center ("New Hanover") of Columbia Cape Fear Memorial Hospital ("Cape Fear") in Wilmington, North Carolina. In this paper, we employ patient-level claims data from four different insurers to estimate the effects of this merger on inpatient prices. Our results provide mixed evidence. Two of the insurers experienced substantial post-merger price increases relative to the control group of hospitals. The post-merger price changes for another insurer, however, were comparable to those for the control group, while the fourth insurer actually experienced a significant price decrease following the merger. Thus it is difficult to draw conclusions about the impact of this merger on inpatient pricing.

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    File URL: http://www.tandfonline.com/10.1080/13571516.2011.542958
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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: 91-101

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    Handle: RePEc:taf:ijecbs:v:18:y:2011:i:1:p:91-101

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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 Competition; Mergers; Nonprofit;

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    Cited by:
    1. Martin Gaynor & Kate Ho & Robert Town, 2014. "The Industrial Organization of Health Care Markets," NBER Working Papers 19800, National Bureau of Economic Research, Inc.
    2. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," CEPR Discussion Papers 8802, C.E.P.R. Discussion Papers.
    3. 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.
    4. 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.
    5. Ron Kemp & Astrid Severijnen, 2010. "Price effects of Dutch hospital mergers, An ex post assessment of hip surgery," NMa Working Papers 2, Netherlands Competition Authority.

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