Vertical Integration on Health Care Markets: Evidence from Brazil

Tainá Leandro and José Guilherme de Lara Resende

No 20/2013, Economics and Politics Working Paper Series from Economics and Politics Research Group (EPRG), University of Brasília

Abstract: This paper investigates the effects of vertical integration among health care insurance companies and hospitals in the Brazilian health care market. We find that vertical integration between an insurance firm and a hospital decreases the total costs of health care plans. This result indicates that vertical integration enhances eciency, a positive outcome on the market. Moreover, we find that this type of vertical integration reduces mainly medical costs, which is evidence that it eliminates the agency problem between hospital and insurance companies. That is, when an insurance firm integrates to a hospital, it is able to cut unnecessary procedures and to reduce the overall medical expenditure.

Keywords: vertical integration; health care; hospitals; health insurance (search for similar items in EconPapers)
JEL-codes: I11 I18 L42 (search for similar items in EconPapers)
Date: 2013-07-31
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Persistent link: https://EconPapers.repec.org/RePEc:gvn:eprgwp:202013

DOI: 10.5281/zenodo.23602788

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