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Vertical Integration on Health Care Markets: Evidence from Brazil

Author

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  • Tainá Leandro
  • José Guilherme de Lara Resende

Abstract

This paper investigates the effects of vertical integration among health care insurance companies and hospitals in the Brazilian health care market. We find that vertical integration between an insurance firm and a hospital decreases the total costs of health care plans. This result indicates that vertical integration enhances eciency, a positive outcome on the market. Moreover, we find that this type of vertical integration reduces mainly medical costs, which is evidence that it eliminates the agency problem between hospital and insurance companies. That is, when an insurance firm integrates to a hospital, it is able to cut unnecessary procedures and to reduce the overall medical expenditure.

Suggested Citation

  • Tainá Leandro & José Guilherme de Lara Resende, 2013. "Vertical Integration on Health Care Markets: Evidence from Brazil," Economics and Politics Working Paper Series 20/2013, Economics and Politics Research Group (EPRG), University of Brasília.
    • Handle: RePEc:gvn:eprgwp:202013
    DOI: 10.5281/zenodo.23602788
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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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