The Milbank Memorial Fund is an endowed operating foundation that publishes The Milbank Quarterly, commissions projects, and convenes state health policy decision makers on issues they identify as important to population health.
We focus on a number of topic areas identified by state health policy leaders as important to population health.
The Center for Evidence-based Policy at Oregon Health & Science University is a national leader in evidence-based decision making and policy design.
Keep up with news and updates from the Milbank Memorial Fund. Get the latest from thought leaders, including Christopher F. Koller, president of the Fund.
We publish The Milbank Quarterly, as well as reports, issues briefs, and case studies on topics important to population health.
September 2009 (Volume 87)
September 2009 | David Dranove, Andrew Sfekas
Context: In recent years, federal courts have permitted hospital consolidations and other potentially anticompetitive actions by accepting hospitals’ claims that they compete in expansive geographic markets. Recent events, including two actions by the U. S. Federal Trade Commission, suggest that antitrust is undergoing a sea change, thanks in part to new methods for defining geographic markets. This article reviews the recent history of hospital antitrust, describes the methods used to define markets, and illustrates the new methods by considering two consolidations recently proposed by a New York regulatory agency.
Methods: The new methods for defining geographic markets rely on estimates from conditional choice models using patient-level hospitalization data. These estimates are the raw material for computations of price effects derived from a theoretical model of hospital pricing in a managed care environment.
Findings: Applying these methods to two proposed consolidations in New York shows that one of the mergers would likely raise prices by a substantial amount without the promise of offsetting efficiencies but that the other would not have this effect.
Conclusions: New methods for geographic market definition may fundamentally alter how courts will evaluate antitrust challenges. Although additional research is necessary to refine the predictions of these new methods, consolidating hospitals, as well as any other hospitals engaging in potentially anticompetitive conduct, can no longer anticipate a friendly reception in the courtroom.
Author(s): David Dranove; Andrew Sfekas
Keywords: health economics; hospital antitrust; hospitals; mergers
Read on Wiley Online Library
Read on JSTOR
Volume 87, Issue 3 (pages 607–632)
Published in 2009
Responsive Consumerism: Empowerment in Markets for Health Plans
Comparative Effectiveness Research in Ontario, Canada: Producing Relevant and Timely Information for Health Care Decision Makers