Is the Impact of Managed Care on Hospital Prices Decreasing?, Journal of Health Economics
Prior studies find that the growth of managed care through the early 1990s introduced a strong positive relationship between price and concentration in hospital markets. We hypothesize that the relaxation of constraints on consumer choice in response to a managed care backlash has diminished the price sensitivity of demand facing hospitals, reducing or possibly reversing the price concentration relationship. We test this hypothesis by studying the price/concentration relationship for hospitals in California and Florida for selected years between 1990 and 2001, while addressing the potential endogeneity of concentration. We find an increasingly positive price/concentration relationship through 1999. Between 1999 and 2001, the relationship weakens and possibly reverses.
David Dranove, Richard C. Lindrooth, William D. White, Jack Zwanziger
Dranove, David, Richard C. Lindrooth, William D. White, and Jack Zwanziger. 2008. Is the Impact of Managed Care on Hospital Prices Decreasing?. Journal of Health Economics. 27(2): 362-376.