Judge Posner's RFP: antitrust law and managed care.
(17/23)
The emergence of a competitive market in health care portends an increasingly important role for antitrust law. Managed care is even more difficult than fee-for-service practice to analyze in the quantitative, economic terms required by modern principles of antitrust law. This paper examines a recent court decision authored by a prominent judge and antitrust scholar: Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic. The purpose of the paper is not to describe the law as it is or as it should be, but to illustrate the assumptions and gaps in understanding that can occur when courts are asked to evaluate this complex and rapidly changing industry without the benefit of sound empirical research. (+info)
Which types of hospital mergers save consumers money?
(18/23)
This study analyzes the changes in costs and prices from 1986 to 1994 for more than 3,500 U.S. short-term general hospitals, including 122 horizontal mergers. These mergers were generally financially beneficial to consumers, providing average price reductions of approximately 7 percent. Merger-related price reductions were considerably less in market areas with higher market concentration levels. Merger-related price reductions in areas with higher penetration by health maintenance organizations (HMOs) were approximately twice those in areas with lower HMO penetration. Merger-related price reductions were greater for low-occupancy hospitals, nonteaching hospitals, nonsystem hospitals, similar-size hospitals, and hospitals with greater premerger service duplication. (+info)
Increasing consolidation in healthcare markets: what are the antitrust policy implications?
(19/23)
OBJECTIVE: To discuss the implications of the rapid transformation of the healthcare financing and delivery system for competition, social welfare, and antitrust policy. PRINCIPAL FINDING: Horizontal and vertical consolidations can enhance efficiency but can also be anticompetitive in markets characterized by entry barriers. RECOMMENDATION: Active enforcement of the antitrust laws is essential to ensure that competition in healthcare markets will lead to procompetitive, rather than anticompetitive effects. However, healthcare antitrust enforcement policy must be flexible enough to allow efficient new forms of organization and practice to emerge. (+info)
Defining competition in markets: why and how?
(20/23)
OBJECTIVE: To examine the variety of perspectives from which to study the measurement of competition in the healthcare marketplace. Based on a meeting held by The Robert Wood Johnson Foundation in 1996, the authors discuss the complications inherent in the way markets and products are defined by key stakeholders, including economists, policymakers, federal antitrust officials, purchasers, and the competitors themselves. CONCLUSION: The consensus among those who study this issue is that the way competitors, markets, and geographic areas are currently defined, and the ways of measuring competition, are inadequate, due mainly to the fact that both the measures and the definitions have been constructed from very limited data. Confounding this is the fact that analyses of competition are undertaken for such a wide variety of uses and that creating one database to solve the problems mentioned can be extremely daunting. RECOMMENDATIONS: Future research should examine ways to develop better definitions of the new healthcare structures that are competing with each other and ways to create measures of competition that include these new structures. To remedy gaps in the ability to measure competition, the field might also benefit from a public use data file, similar to the Area Resource File (ARF), that would contain HMO data according to geographic area, as well as provider data, employer data, payer data, and sociodemographic data. (+info)
Managed care, market power, and monopsony.
(21/23)
OBJECTIVE: To examine the theoretical possibility of monopsony behavior under managed care insurance. STUDY DESIGN: Use of microeconomic theory to examine how managed care plans with market power would be expected to behave, and effects of that behavior on consumer and supplier welfare. PRINCIPAL FINDINGS: The article shows that, under managed care monopsony, the welfare of consumers may be increased but overall economic welfare will necessarily be reduced. It offers a test for whether the lower prices paid by managed care buyers with larger market share represent welfare-reducing monopsony or a welfare-increasing movement away from provider monopoly. The test says that, if the quantity of inputs (supplied under conditions of increasing long-run marginal cost) declines, monopsony is present. The article also argues that the translation of lower provider prices into lower premiums is consistent with welfare-reducing monopsony by nonprofit health plans. In contrast, for-profit health plans that obtain monopsony may reduce the welfare of consumers as well as that of input suppliers. These theoretical conclusions are shown to be consistent with recent empirical research indicating a negative relationship between buyer market power and cost per enrollee. CONCLUSIONS: Traditional antitrust policy has not been able to deal well with monopsony. The article concludes that health plans that use their market power to reduce medical spending may harm the well-being both of specialized medical workers and of consumers of medical care. Antitrust policy may need to be modified to deal with this situation. (+info)
Marshfield Clinic, physician networks, and the exercise of monopoly power.
(22/23)
OBJECTIVE: Antitrust enforcement can improve the performance of large, vertically integrated physician-hospital organizations (PHOs). Objective: To examine the recent court decisions in the Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic antitrust case to understand better the benefits and costs of vertical integration in healthcare. SUMMARY AND CONCLUSIONS: Vertical integration in the Marshfield Clinic may have had the benefits of reducing transactions and uncertainty costs while improving the coordination between ambulatory and inpatient visits, but at the cost of Marshfield Clinic's monopolizing of physician services and foreclosing of HMO entry in northwest Wisconsin. The denial of hospital staff privileges to non-Marshfield Clinic physicians combined with certificate-of-need regulations impeded physician entry and solidified Marshfield Clinic's monopoly position. Enforcement efforts of recent antitrust guidelines by the U.S. Department of Justice and the Federal Trade Commission will need to address carefully the benefits and costs of vertically integrated systems. (+info)
Antitrust enforcement in the healthcare industry: the expanding scope of state activity.
(23/23)
OBJECTIVE: To describe the landscape of state antitrust activity and review related research and policy issues. In particular, to examine state laws that attempt to immunize mergers among healthcare providers from state and federal antitrust prosecution and consent decrees issued by state attorneys general permitting healthcare providers to merge. DATA SOURCES: State laws attempting to immunize collaborative activities from state and federal antitrust prosecution and consent decrees between state attorneys general and collaborating healthcare providers. PRINCIPAL FINDINGS: State antitrust agencies have been more willing than federal antitrust agencies to approve mergers that are contingent on the fulfillment of specific conditions that require continued oversight. CONCLUSIONS: Research is needed to inform policymakers about the consequences of state-approved mergers on market performance. (+info)