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Is Hospital Competition Socially Wasteful?

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Author Info
Daniel P. Kessler
Mark B. McClellan
Abstract

We study the consequences of hospital competition for Medicare beneficiaries' heart attack care from 1985 to 1994. We examine how relatively exogenous determinants of hospital choice such as travel distances influence the competitiveness of hospital markets, and how hospital competition interacts with the influence of managed care organizations to affect the key determinants of social welfare expenditures on treatment and patient health outcomes. In the 1980s, the welfare effects of competition were ambiguous; but in the 1990s, competition unambiguously improves social welfare. Increasing HMO enrollment over the sample period partially explains the dramatic change in the impact of hospital competition.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7266.

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Date of creation: Jul 1999
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Handle: RePEc:nbr:nberwo:7266

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  2. 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)
  3. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-69, September. [Downloadable!] (restricted)
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  7. Noether, Monica, 1988. "Competition among hospitals," Journal of Health Economics, Elsevier, vol. 7(3), pages 259-284, September. [Downloadable!] (restricted)
  8. Kessler, Daniel & McClellan, Mark, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 353-90, May. [Downloadable!] (restricted)
  9. Caroline Minter Hoxby, 1994. "Does Competition Among Public Schools Benefit Students and Taxpayers?," NBER Working Papers 4979, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Joskow, Paul L., 1983. "Reimbursement policy, cost containment and non-price competition," Journal of Health Economics, Elsevier, vol. 2(2), pages 167-174, August. [Downloadable!] (restricted)
  11. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(1), pages 169-209, Spring.
  12. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer. [Downloadable!] (restricted)
  13. Zwanziger, Jack & Melnick, Glenn A., 1988. "The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California," Journal of Health Economics, Elsevier, vol. 7(4), pages 301-320, December. [Downloadable!] (restricted)
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  15. Daniel Kessler & Mark McClellan, 1999. "Designing Hospital Antitrust Policy to Promote Social Welfare," NBER Chapters, in: Frontiers in Health Policy research, volume 2, pages 53-76 National Bureau of Economic Research, Inc. [Downloadable!]
  16. Panzar, John C, 1979. "Equilibrium and Welfare in Unregulated Airline Markets," American Economic Review, American Economic Association, vol. 69(2), pages 92-95, May. [Downloadable!] (restricted)
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  18. Manheim, Larry M & Bazzoli, Gloria J & Sohn, Min-Woong, 1994. "Local Hospital Competition in Large Metropolitan Areas," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(1), pages 143-67, Spring.
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  20. Woolley, J. Michael, 1989. "The competitive effects of horizontal mergers in the hospital industry," Journal of Health Economics, Elsevier, vol. 8(3), pages 271-291, December. [Downloadable!] (restricted)
  21. Richard Schmalensee, 1977. "Comparative Static Properties of Regulated Airline Oligopolies," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 565-576, Autumn. [Downloadable!] (restricted)
  22. Lynk, William J, 1995. "Nonprofit Hospital Mergers and the Exercise of Market Power," Journal of Law & Economics, University of Chicago Press, vol. 38(2), pages 437-61, October.
  23. Dranove, David & Shanley, Mark & White, William D, 1993. "Price and Concentration in Hospital Markets: The Switch from Patient-Driven to Payer-Driven Competition," Journal of Law & Economics, University of Chicago Press, vol. 36(1), pages 179-204, April.
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  25. Mark A. Satterthwaite, 1979. "Consumer Information, Equilibrium Industry Price, and the Number of Sellers," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 483-502, Autumn. [Downloadable!] (restricted)
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Full references

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daniel P. Kessler & Mark B. McClellan, 2000. "Medical Liability, Managed Care, and Defensive Medicine," NBER Working Papers 7537, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. 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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  3. Victor R. Fuchs & Mark McClellan & Jonathan Skinner, 2001. "Area Differences in Utilization of Medical Care and Mortality Among U.S. Elderly," NBER Working Papers 8628, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Francisco Marcos & Juan Santalo, 2007. "Tomb price discrimination in cemeteries: competition in the market for corpses?," Working Papers Economia wp07-09, Instituto de Empresa, Area of Economic Environment. [Downloadable!]
  5. Mark Duggan, 2000. "Hospital Ownership and Public Medical Spending," NBER Working Papers 7789, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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