Simulating Hospital Merger Simulations

Balan, David J.; Brand, Keith

doi:10.2139/ssrn.3153109

Cited by 5 publications

(2 citation statements)

References 24 publications

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“…There can be an additional practical limitation to applying the WTP/Q and DWTP/Q methods. As described in Brand and Garmon [2014] and Farrell et al . [2011], in a given hospital market, there may be only a small number of observations or insufficient variation in the data (i.e., many of the hospital systems in the analysis may have similar values of WTP/Q or DWTP/Q ).…”

Section: Discussionmentioning

confidence: 99%

Simulating Hospital Merger Simulations*

Balan

Brand

2023

The J Industrial Economics

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We perform a Monte Carlo experiment to assess the performance of three hospital merger simulation methods. Our analysis proceeds as follows: (i) specify a theoretical model of hospital markets and use it to generate "true" price effects for many simulated mergers; (ii) for each simulated merger, generate data of the kind commonly available in real-world merger analysis and apply the simulation methods to those data; and (iii) compare the predictions of the simulation methods to the true price effects. All three simulation methods perform reasonably well. We also develop a method for predicting price effects that extends Garmon [2017]. I. INTRODUCTION IN RECENT YEARS, THE ECONOMICS LITERATURE HAS PRODUCED A NUMBER OFMETHODS for predicting the price effects of hospital mergers. We refer to these as "simulation" methods. These methods are appealing because they are reasonably tractable and can be applied to data that are commonly available in real-world merger cases. The methods have been used in internal analyses at the Federal Trade Commission (Farrell et al. [2011]), and also by testifying economic experts in recent litigated hospital merger cases. 1 The critical question about these simulation methods is how well they perform in predicting real-world price effects of mergers. An important recent *We are grateful to

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Section: Discussionmentioning

confidence: 99%

Simulating Hospital Merger Simulations*

Balan

Brand

2023

The J Industrial Economics

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“…Panayides et al [37] apply a game-theoretic model involving three parties, including emergency services. Simulation can also be used to analyze the interaction between multiple hospitals [38,39].…”

Section: Introductionmentioning

confidence: 99%

The Effects of Contract Mechanisms between the Government and Private Hospitals on the Social Utility

Teymourifar,

Kaya,

Ozturk

2023

Preprint

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In this work, we deal with a real healthcare system, in which public and private hospitals with different characteristics co-exist. While public hospitals have lower costs, they also suffer from long waiting times, diminishing the perceived quality of care for patients. Conversely, private hospitals, with their higher fees, offer shorter waiting periods, resulting in a more favorable perception of quality. A balanced healthcare system could offer societal benefits. Pricing strategies greatly influence a patient's hospital selection. For instance, reduced fees in private hospitals attract more patients, consequently reducing overcrowding in public facilities and elevating the overall quality of services provided. This study aims to develop pricing models to foster a balanced and socially advantageous healthcare system. Within this system, private hospital pricing is determined through contract mechanisms with the government. Thus, we delve into the ramifications of various contract models between the government and private hospitals on social utility. Our findings underscore the communal advantages of contract mechanisms. Furthermore, we generalize the proposed models to be applicable to similar systems.

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The Impact of Competition on Investment: Evidence From California Hospitals*

Wilson

2021

The J Industrial Economics

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I examine the relationship between bargaining leverage and capital investment using data on California’s hospital markets. I find evidence that investment increases with bargaining leverage; a hospital whose bargaining position improves by one standard deviation will increase its investment rate by 16 percentage points. A positive causal relationship between bargaining leverage and investment fits the institutional details of the health care sector, where many firms have non‐profit tax status, making it difficult to return monopoly rents to shareholders. Consistent with this explanation, I find that non‐profit hospitals with bargaining leverage invest more than for‐profit ones, all else equal. I do not find strong evidence that financing constraints matter disproportionately for hospitals operating in more competitive markets, supporting the hypothesis that the incremental investment may not be socially efficient.

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Simulating Hospital Merger Simulations

Cited by 5 publications

References 24 publications

Simulating Hospital Merger Simulations*

Simulating Hospital Merger Simulations*

The Effects of Contract Mechanisms between the Government and Private Hospitals on the Social Utility

The Impact of Competition on Investment: Evidence From California Hospitals*

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