Consolidations, efficiency, and quality in health care markets

Chapter 2 of this dissertation investigates if hospitals use consolidation to increase their market power and charge higher prices. Effects of several different types of consolidation are examined at the aggregate hospital level as well as at service category levels. Hospital-level analysis finds that consolidations involving smaller independent hospitals from the same market area result in reductions in the amount charged. For other types of consolidations, the evidence is inconclusive. Evidence from micro-level analyses indicates that hospitals that are part of a system that acquire another system charge less as a result of consolidation than other hospitals. It further suggests that the price of care increases in a system hospital after it has been taken over by another system.; Chapter 3 examines if quality of care varies systematically across different types of managed care organizations (MCOs). Using a logistic framework, this study focuses on a number of chronic medical conditions for which better preventive care could reduce the likelihood of inpatient and/or ER visits. The evidence indicates that individuals enrolled in an HMO or in a capitated point of service (POS) plan have higher odds of inpatient and/or ER visits as compared to those in traditional indemnity plans. This trend is, however, reversed for enrollees in preferred provider organization (PPO) and non-capitated POS plans. Overall, this study finds that the quality of care for those with chronic conditions is worse in more restrictive types of managed care plans and better in less restrictive plans.; Chapter 4 is a theoretical investigation of the effects of gatekeeping arrangement on patient welfare. In this arrangement, a patient is assigned to a “gatekeeper” primary care physician for all non-emergency medical care needs. Referrals from the gatekeeper are required whenever specialized services are needed. A third-party payer makes the payment on the patient's behalf once the treatment is provided observing only the cost of treatment. In equilibrium, the gatekeeper physician treats patients with a low severity of illness and refers high severity patients to the specialist. The gatekeeper physician refers more patients to the specialist than is socially optimal.