Designing Hospital Antitrust Policy to Promote Social Welfare

Daniel Kessler and Mark McClellan

No 6897, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Applying principles of merger evaluation to the health care industry in general, and to hospital markets in particular, poses several unique challenges. Definition of relevant geographic markets and assessment of the consequences of changes in competition for patient and social welfare are complicated by asymmetric information and moral hazard due to health insurance. We suggest a new empirical approach to assessing the impact of hospital competition which addresses the shortcomings of existing methods. We then summarize our main results on the welfare consequences of competition. We conclude with an illustration of how our methods can be used to assess the welfare implications of specific hospital mergers, and with some implications of our findings for antitrust policy.

Date: 1999-01
New Economics Papers: this item is included in nep-hea
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Published as Frontiers in Health Policy Research. Garber, Alan M., ed., Cambridge: MIT Press, 1999, pp. 53-75.
Published as Designing Hospital Antitrust Policy to Promote Social Welfare , Daniel Kessler, Mark McClellan. in Frontiers in Health Policy Research, volume 2 , Garber. 1999

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