Hospital competition in HMO networks

Hospital competition in HMO networks We develop a framework for analyzing bargaining relationships between hospitals and HMOs under selective contracting. Using a unique dataset on hospitals in the Los Angeles area from 1990 to 1993, we estimate the determinants of actual negotiated prices paid to hospitals by two major HMOs. We find that a hospital’s bargaining power, and thus its price, decrease when the HMO can readily turn to alternative networks that exclude the hospital. We simulate the effect of hypothetical hospital mergers on bargaining power and find that some hospital mergers, even in urban areas with many nearby hospitals, can lead to significant price increases. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Health Economics Elsevier

Hospital competition in HMO networks

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Publisher
Elsevier
Copyright
Copyright © 2001 Elsevier Science B.V.
ISSN
0167-6296
eISSN
1879-1646
D.O.I.
10.1016/S0167-6296(01)00096-0
Publisher site
See Article on Publisher Site

Abstract

We develop a framework for analyzing bargaining relationships between hospitals and HMOs under selective contracting. Using a unique dataset on hospitals in the Los Angeles area from 1990 to 1993, we estimate the determinants of actual negotiated prices paid to hospitals by two major HMOs. We find that a hospital’s bargaining power, and thus its price, decrease when the HMO can readily turn to alternative networks that exclude the hospital. We simulate the effect of hypothetical hospital mergers on bargaining power and find that some hospital mergers, even in urban areas with many nearby hospitals, can lead to significant price increases.

Journal

Journal of Health EconomicsElsevier

Published: Sep 1, 2001

References

  • Hospital-insurer bargaining: an empirical investigation of appendectomy pricing
    Brooks, J.M; Dor, A; Wong, H.S
  • Hospital mergers and antitrust enforcement
    Vistnes, G

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