Using Difference-in-Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic

Martha Starr () and R McCluer

No 2012-07, Working Papers from American University, Department of Economics

Abstract: In calculating damages in healthcare antitrust cases, the difference-in-difference (DID) approach provides a potentially valuable means of controlling for lawful factors that influence prices, such as case-mix and quality of care, as distinct from price differentials due to unlawful behavior. After first comparing DID to traditional methods of estimating damages, this paper uses DID to analyze data from a well-known case against Marshfield Clinic, a large multispecialty group practice that was found to have illegally allocated markets for physician services in Central Wisconsin. Using a specification similar to what was used in the case, we find that illegal behavior accounted for about two-fifths of the Clinic's extra increase in costs per patient during the damage period. The courts, however, were not persuaded that the analysis adequately controlled for legal factors. We discuss potential pitfalls in using DID to estimate damages suggested by the case, as well as possible ways around them.

Keywords: healthcare antitrust; differences-in-differences; damage estimation JEL Classifications: I11; L4; K21; K41; C20 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-com, nep-hea and nep-law
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https://drive.google.com/open?id=1pcb_fw6GpnfDxQc5lA3fYhLFlVJ3ltx8 First version, 2012 (application/pdf)

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Journal Article: Using Difference in Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic (2013)
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