41APPENDIX C THE PRICES THAT COMMERCIAL HEALTH INSURERS AND MEDICARE PAY FOR HOSPITALS’ AND PHYSICIANS’ SERVICES
Source Data Period Experiment or Methods Findings
Matthew S. Lewis and Kevin E.
Pum, “Hospital Systems and
Bargaining Power: Evidence From
Out-of-Market Acquisitions,” RAND
Journal of Economics, vol. 48,
no. 3 (Fall 2017), pp. 579–610,
https://doi.org/10.1111/
1756-2171.12186
1998–2010 Examined price changes at
hospitals acquired by an out-of-
market health system (more than
45 miles away) relative to price
changes at control hospitals that
did not join a health system
•
Out-of-market mergers resulted in price
increases for merging hospitals as well as for
their local rivals.
•
When independent hospitals were acquired by
an out-of-market system, prices rose by about
17 percent.
Gautam Gowrisankaran, Aviv Nevo,
and Robert Town, “Mergers When
Prices Are Negotiated: Evidence From
the Hospital Industry,” American
Economic Review, vol. 105, no.1
(January 2015), pp. 172–203,
https://doi.org/10.1257/aer.20130223
2003–2006 Simulated the eects of the
proposed merger of Prince William
Hospital and Inova Health System in
northern Virginia using a bargaining
model of competition
•
If the Federal Trade Commission had permitted
it, the proposed merger would have increased
prices by about 3 percent, on average.
Glenn A. Melnick, Yu-Chu Shen, and
Vivian Yaling Wu, “The Increased
Concentration of Health Plan
Markets Can Benet Consumers
Through Lower Hospital Prices,”
Health Aairs, vol. 30, no. 9
(September 2011), pp.728–
1733, https://doi.org/10.1377/
hltha.2010.0406
2001 and 2004 Examined the association between
hospitals’ prices and market
concentration for health plans and
hospitals among all nonfederal,
general, acute care hospitals
located in metropolitan statistical
areas
•
A 1,000-point increase in the concentration of a
hospital market (as measured by the Herndahl-
Hirschman index) was associated with an
8.3percent increase in prices.
Deborah Haas-Wilson and Christopher
Garmon, “Hospital Mergers
and Competitive Eects: Two
Retrospective Analyses,” International
Journal of the Economics of Business,
vol. 18, no. 1 (February 2011), pp.17–
32, https://doi.org/10.1080/
13571516.2011.542952
Fiscal years
1999 and 2002
Examined price changes for
two hospital mergers in the
Chicago metropolitan area,
Evanston Northwestern–Highland
Park Hospital and Vista Health
(St.Therese–Victory Memorial
Hospital), relative to price changes
for control hospitals in that area
•
After the Evanston merger, price increases were
at least 10 percentage points larger at the
merged hospitals than at control hospitals for
four of the ve insurers included in the study.
•
After the Vista Health merger, three of the ve
insurers experienced smaller price increases at
the merged hospital than at the control hospitals.
Only one insurer experienced a larger price
increase at the merged hospital than at the
controls.
Steven Tenn, “The Price Eects of
Hospital Mergers: A Case Study of
the Sutter–Summit Transaction,”
International Journal of the
Economics of Business, vol. 18,
no. 1 (February 2011), pp. 65–82,
https://doi.org/10.1080/
13571516.2011.542956
1999 and 2001 Examined price changes for the
Sutter Alta Bates–Summit hospital
merger in California relative to
price changes for a set of control
hospitals in that state
•
After the merger, price increases at Summit
were 28 percent to 44 percent higher,
depending on the insurer, than the average price
increase at the control group, but prices at Alta
Bates did not change signicantly.
Aileen Thompson, “The Eect of
Hospital Mergers on Inpatient Prices:
A Case Study of the New Hanover–
Cape Fear Transaction,” International
Journal of the Economics of Business,
vol. 18, no. 1 (February 2011),
pp.91–101, https://doi.org/10.1080/
13571516.2011.542958
1997–1998 and
2001–2002
Examined price changes for the
New Hanover–Cape Fear hospital
merger in North Carolina relative to
price changes for a control group of
similar urban hospitals in that state
•
After the merger, prices increased for some
insurers and decreased for others. For two
insurers, prices increased by 56.5 percent and
65.3 percent, respectively, while for another
insurer, prices declined by 30 percent.
Asako S. Moriya, William B. Vogt,
and Martin Gaynor, “Hospital
Prices and Market Structure in the
Hospital and Insurance Industries,”
Health Economics, Policy, and
Law, vol. 5, no. 4 (October 2010),
pp.459–479, https://doi.org/10.1017/
S1744133110000083
2001–2003 Examined the association between
hospitals’ prices and changes in
market concentration for insurers
and hospitals across health service
areas
•
The relationship between increases in hospital
market concentration and prices was not
signicant.
Table C-1. Continued
Studies of the Relationship Between Hospital Market Concentration and Prices