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Non-profit hospital mergers: the effect on healthcare costs and utilization

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  • Maysam Rabbani

    (University of South Florida)

Abstract

I use a 2010 non-profit hospital merger in Ohio to study the effect of market concentration on market outcomes. Using the Synthetic Control Method and Truven MarketScan data, I document three findings. First, courts are lenient to non-profit mergers, and I cast doubt on this practice by showing that the studied merger led to a 123% increase in the payments for inpatient childbirth services. Second, I provide the first empirical evidence for the conjecture that mergers increase out-of-pocket payments and reduce the utilization of care. Last, I show that the effect of market power on market outcomes is asymmetric: the increase in payments and welfare loss created by a merger persist after the merger is rescinded. Thus, even successful FTC challenges may not revert the effect of harmful mergers, and it is essential to deny such mergers before they proceed.

Suggested Citation

  • Maysam Rabbani, 2021. "Non-profit hospital mergers: the effect on healthcare costs and utilization," International Journal of Health Economics and Management, Springer, vol. 21(4), pages 427-455, December.
    • Handle: RePEc:kap:ijhcfe:v:21:y:2021:i:4:d:10.1007_s10754-021-09303-8
    DOI: 10.1007/s10754-021-09303-8
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    Cited by:

    1. Rabbani, Maysam, 2024. "Internet price, speed, and disparity: The case of rural healthcare providers in the United States," Telecommunications Policy, Elsevier, vol. 48(2).
    2. Rabbani, Maysam, 2024. "Dollars and megabits: A comparative analysis of Telecom and Healthcare Connect Fund," Information Economics and Policy, Elsevier, vol. 67(C).
    3. Rabbani, Maysam, 2023. "Mergers with future rivals can boost prices, bar entry, and intensify market concentration," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    4. Rabbani, Maysam, 2021. "Mergers with Future Rivals Can Boost Prices, Intensify Market Concentration, and Bar Entry," MPRA Paper 112864, University Library of Munich, Germany, revised 26 Apr 2022.

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    More about this item

    Keywords

    Mergers and acquisitions; Non-profit hospital; Healthcare cost and utilization; Federal Trade Commission; Market power;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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