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Price effects of a hospital merger: Heterogeneity across health insurers, hospital products, and hospital locations

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  • Anne‐Fleur Roos
  • Ramsis R. Croes
  • Victoria Shestalova
  • Marco Varkevisser
  • Frederik T. Schut

Abstract

In most studies on hospital merger effects, the unit of observation is the merged hospital, whereas the observed price is the weighted average across hospital products and across payers. However, little is known about whether price effects vary between hospital locations, products, and payers. We expand existing bargaining models to allow for heterogeneous price effects and use a difference‐in‐differences model in which price changes at the merging hospitals are compared with price changes at comparison hospitals. We find evidence of heterogeneous price effects across health insurers, hospital products and hospital locations. These findings have implications for ex ante merger scrutiny.

Suggested Citation

  • Anne‐Fleur Roos & Ramsis R. Croes & Victoria Shestalova & Marco Varkevisser & Frederik T. Schut, 2019. "Price effects of a hospital merger: Heterogeneity across health insurers, hospital products, and hospital locations," Health Economics, John Wiley & Sons, Ltd., vol. 28(9), pages 1130-1145, September.
  • Handle: RePEc:wly:hlthec:v:28:y:2019:i:9:p:1130-1145
    DOI: 10.1002/hec.3920
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    File URL: https://doi.org/10.1002/hec.3920
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    References listed on IDEAS

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    1. Gautam Gowrisankaran & Aviv Nevo & Robert Town, 2015. "Mergers When Prices Are Negotiated: Evidence from the Hospital Industry," American Economic Review, American Economic Association, vol. 105(1), pages 172-203, January.
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    5. repec:zbw:rwirep:0469 is not listed on IDEAS
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    12. Hentschker, Corinna & Mennicken, Roman & Schmid, Andreas, 2014. "Defining Hospital Markets - An Application to the German Hospital Sector," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 1-17.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Jason Shafrin’s journal round-up for 9th September 2019
      by Jason Shafrin in The Academic Health Economists' Blog on 2019-09-09 11:00:23
    2. Academic Health Economist’s Blog: Journal Round Up
      by Jason Shafrin in Healthcare Economist on 2019-09-09 21:01:11

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    Cited by:

    1. Rudy Douven & Chiara Brouns & Ron Kemp, 2020. "Prices and market power in mental health care: Evidence from a major policy change in the Netherlands," CPB Discussion Paper 414.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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