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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

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.

Suggested Citation

  • Aileen Thompson, 2011. "The Effect of Hospital Mergers on Inpatient Prices: A Case Study of the New Hanover-Cape Fear Transaction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 91-101.
  • Handle: RePEc:taf:ijecbs:v:18:y:2011:i:1:p:91-101
    DOI: 10.1080/13571516.2011.542958
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    Citations

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    Cited by:

    1. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    2. Ron Kemp & Nikki Kersten & Astrid Severijnen, 2012. "Price Effects of Dutch Hospital Mergers: An Ex-post Assessment of Hip Surgery," De Economist, Springer, vol. 160(3), pages 237-255, September.
    3. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    4. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    5. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
    6. Helda Azevedo & Céu Mateus, 2014. "Cost effects of hospital mergers in Portugal," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 999-1010, December.
    7. Cory Capps & Dennis W. Carlton & Guy David, 2017. "Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care?," NBER Working Papers 23131, National Bureau of Economic Research, Inc.
    8. Schmid, Andreas & Varkevisser, Marco, 2016. "Hospital merger control in Germany, the Netherlands and England: Experiences and challenges," Health Policy, Elsevier, vol. 120(1), pages 16-25.

    More about this item

    Keywords

    Hospital Competition; Mergers; Nonprofit;

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