Using Difference-in-Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic
AbstractIn calculating damages in healthcare antitrust cases, the difference-in-difference (DID) approach provides a potentially valuable means of controlling for lawful factors that influence prices, such as case-mix and quality of care, as distinct from price differentials due to unlawful behavior. After first comparing DID to traditional methods of estimating damages, this paper uses DID to analyze data from a well-known case against Marshfield Clinic, a large multispecialty group practice that was found to have illegally allocated markets for physician services in Central Wisconsin. Using a specification similar to what was used in the case, we find that illegal behavior accounted for about two-fifths of the Clinic's extra increase in costs per patient during the damage period. The courts, however, were not persuaded that the analysis adequately controlled for legal factors. We discuss potential pitfalls in using DID to estimate damages suggested by the case, as well as possible ways around them.
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Bibliographic InfoPaper provided by American University, Department of Economics in its series Working Papers with number 2012-07.
Date of creation: Feb 2012
Date of revision:
Contact details of provider:
Web page: http://www.american.edu/cas/economics/
healthcare antitrust; differences-in-differences; damage estimation JEL Classifications: I11; L4; K21; K41; C20;
Other versions of this item:
- R. Forrest McCluer & Martha A. Starr, 2013. "Using Difference in Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(3), pages 447-469, November.
- dam - - - - - -
- est - - - - - -
- JEL - Labor and Demographic Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L4 - Industrial Organization - - Antitrust Issues and Policies
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-COM-2012-06-25 (Industrial Competition)
- NEP-HEA-2012-06-25 (Health Economics)
- NEP-LAW-2012-06-25 (Law & Economics)
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