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Nonprofit Hospital Mergers and the Exercise of Market Power

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Author Info
Lynk, William J
Abstract

Government challenges to mergers within the hospital industry have become more frequent. Many of those mergers involve nonprofit organizations rather than the for-profit firms that are the norm in most other industries. This difference in ownership has made no apparent difference in the antitrust agencies' approach to proposed hospital mergers. In this article I test the proposition that nonprofit and for-profit hospitals price differently in response to the structure of the markets in which they compete. Based on a cross-sectional analysis of California hospitals, I find that estimated merger effects on hospital prices do vary by type of ownership. In response to either higher market share or to the joint combination of higher share and higher market concentration, private nonprofit hospital prices are statistically significantly lower than for-profit hospital prices, and on balance in this sample there is no evidence of any systematic price-increasing effect on private nonprofit hospitals. Copyright 1995 by the University of Chicago.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 38 (1995)
Issue (Month): 2 (October)
Pages: 437-61
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ucp:jlawec:v:38:y:1995:i:2:p:437-61

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  2. Robert A. Connor Roger D. Feldman Bryan E. Dowd, 1998. "The Effects of Market Concentration and Horizontal Mergers on Hospital Costs and Prices," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(2), pages 159-180, July. [Downloadable!] (restricted)
  3. Seth Sacher Louis Silvia, 1998. "Antitrust Issues in Defining the Product Market for Hospital Services," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(2), pages 181-202, July. [Downloadable!] (restricted)
  4. Jean Marie Abraham & Martin Gaynor & William B Vogt, 2003. "Entry and Competition in Local Hospital Markets," The Centre for Market and Public Organisation 03/088, Department of Economics, University of Bristol, UK. [Downloadable!]
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  7. Nazmi Sari, 2002. "Do competition and managed care improve quality?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 571-584. [Downloadable!]
  8. Martin Gaynor & Deborah Haas-Wilson, 1998. "Change, Consolidation, and Competition in Health Care Markets," HEW 9809001, EconWPA. [Downloadable!]
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  9. Tomas J. Philipson & Richard A. Posner, 2006. "Antitrust in the Not-For-Profit Sector," NBER Working Papers 12132, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Pierre Koning & Joëlle Noailly & Sabine Visser, 2007. "Do Not-For-Profits Make a Difference in Social Services? A Survey Study," De Economist, Springer, vol. 155(3), pages 251-270, September. [Downloadable!] (restricted)
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  14. Teresa D. Harrison, 2007. "Consolidations and closures: an empirical analysis of exits from the hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 16(5), pages 457-474. [Downloadable!]
  15. Sujoy Chakravarty & Martin Gaynor & Steven Klepper & William B. Vogt, 2006. "Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 345-361. [Downloadable!]
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  16. John Simpson Richard Shin, 1998. "Do Nonprofit Hospitals Exercise Market Power?," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(2), pages 141-157, July. [Downloadable!] (restricted)
  17. Daniel P. Kessler & Mark B. McClellan, 1999. "Is Hospital Competition Socially Wasteful?," NBER Working Papers 7266, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Martin Gaynor & William B. Vogt, 1999. "Antitrust and Competition in Health Care Markets," NBER Working Papers 7112, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Daniel Kessler & Mark McClellan, 1999. "Designing Hospital Antitrust Policy to Promote Social Welfare," NBER Working Papers 6897, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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