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Different Multi-hospital Types and Their Association with Pricing of Cardiac and Cancer Surgeries Open Access

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Multi-hospital systems and networks have become increasingly prevalent in the United States. 3,100 US-based community hospitals, accounting for 62% of all US-based community hospitals, are affiliated members of a health system, and 1,508 hospitals, or 30.17% of US-based community hospitals, are affiliated with a health network in 2014. There are two main rationales behind the proliferation of health systems and networks in the US. One reason is a procompetitive efficiency gain from health systems and networks. Systems/networks can enhance efficiency in health care delivery and promote competition by enabling participants to pool expensive medical devices for attaining economies of scale or scope in health care delivery. The other reason is enhanced market power from health systems/network affiliations. Hospital systems and networks can harm competition by leveraging their market power to raise the price of care. The overall competitive effect of hospital systems and networks is an empirical question. The first essay explores the effects of different types of health system affiliation on pricing of cardiac and cancer surgeries. The second essay examines the price effects of different types of health system formations rather than affiliations on cardiac procedures. The third essay investigates whether the Antitrust Statements on hospital mergers and acquisitions can screen a potentially anticompetitive health system formation, using the new market definition (primary service area) proposed regarding accountable care organizations (ACOs). The results of the first essay suggest that procompetitive effects of health system affiliation tend to dominate anticompetitive effects in less centralized health systems and that anticompetitive effects of health system affiliation tend to dominate procompetitive effects in more centralized health systems. The findings of the second essay suggest that a highly centralized health system formation is more likely to raise the negotiated price of cardiac surgery than that of a less centralized health system formation. The results of the third essay show that a potentially anticompetitive hospital consolidation was exempt from comprehensive antitrust review under the current Antitrust Statements on hospital mergers and acquisitions, and this can be interpreted that current antitrust safety zone rules may be too broadly determined to promote efficiency in health care delivery.

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