Hospital prices and market structure in the hospital and insurance industries

Moriya, Asako S.; Vogt, William B.; Gaynor, Martin

doi:10.1017/s1744133110000083

Cited by 79 publications

(99 citation statements)

References 40 publications

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“…To execute this analysis, we supplemented the LEHID data with the Occupational Employment Statistics (OES) survey on income and employment in 32 A number of recent studies examine the effect of insurer bargaining power on hospital prices, including Feldman and Wholey (2001), Sorensen (2003), Moriya, Vogt, andGaynor (2010), andHo (2009 health care-related occupations. We restrict our attention to the 43 occupation categories that are classified under the Standard Occupational Classification (SOC) system as "Healthcare Practitioner and Technical Occupations."…”

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confidence: 99%

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

Dafny

Duggan

Ramanarayanan

2012

American Economic Review

212

122

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We examine whether and to what extent consolidation in the US health insurance industry has contributed to higher employer-sponsored insurance premiums. We exploit the differential impact across local markets of a national merger of two insurers to identify the causal effect of concentration on premiums. Using data for large groups, we estimate premiums in average markets were approximately seven percentage points higher by 2007 due to increases in local concentration from 1998–2006. We also find evidence consolidation facilitates the exercise of monopsonistic power vis-à-vis physicians, leading to reductions in their absolute employment and earnings relative to other healthcare workers. JEL: G22, I13

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confidence: 99%

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

Dafny

Duggan

Ramanarayanan

2012

American Economic Review

212

122

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“…46 Even competing commissioners often negotiate collectively with providers, attempting to wield power through a de facto monopsony 35 (one buyer confronting many sellers), which in a health system with flexible prices would help reduce those prices. 48 …”

Section: Overviewmentioning

confidence: 99%

NHS commissioning practice and health system governance: a mixed-methods realistic evaluation

Sheaff

Charles

Mahon

et al. 2015

Health Services and Delivery Research

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BackgroundBy 2010 English health policy-makers had concluded that the main NHS commissioners [primary care trusts (PCTs)] did not sufficiently control provider costs and performance. After the 2010 general election, they decided to replace PCTs with general practitioner (GP)-controlled Clinical Commissioning Groups (CCGs). Health-care commissioners have six main media of power for exercising control over providers, which can be used in different combinations (‘modes of commissioning’).ObjectivesTo: elicit the programme theory of NHS commissioning policy and empirically test its assumptions; explain what shaped NHS commissioning structures; examine how far current commissioning practice allowed commissioners to exercise governance over providers; examine how commissioning practices differ in different types of commissioning organisation and for specific care groups; and explain what factors influenced commissioning practice and the relationships between commissioners and providers.DesignMixed-methods realistic evaluation, comprising: Leximancer and cognitive frame analyses of policy statements to elicit the programme theory of NHS commissioning policy; exploratory cross-sectional analysis of publicly available managerial data about PCTs; systematic comparison of case studies of commissioning in four English sites – including commissioning for older people at risk of unplanned hospital admission; mental health; public health; and planned orthopaedic surgery – and of English NHS commissioning practice with that of a German sick-fund and an Italian region (Lombardy); action learning sets, to validate the findings and draw out practical implications; and two framework analyses synthesising the findings and testing the programme theory empirically.ResultsIn the four English case study sites, CCGs were formed by recycling former commissioning structures, relying on and maintaining the existing GP commissioning leaderships. The stability of distributed commissioning depended on the convergence of commissioners’ interests. Joint NHS and local government commissioning was more co-ordinated at strategic than operational level. NHS providers’ responsiveness to commissioners reflected how far their interests converged, but also providers’ own internal ability to implement agreements. Commissioning for mental health services and to prevent recurrent unplanned hospital readmissions relied more on local ‘micro-commissioning’ (collaborative care pathway design) than on competition. Service commissioning was irrelevant to intersectoral health promotion, but not clinical prevention work. On balance, the possibility of competition did not affect service outcomes in the ways that English NHS commissioning policies assumed. ‘Commodified’ planned orthopaedic surgery most lent itself to provider competition. In all three countries, tariff payments increased provider activity and commissioners’ costs. To contain costs, commissioners bundled tariff payments into blocks, agreed prospective case loads with providers and paid below-tariff rates for additional cases. Managerial performance, negotiated order and discursive control were the predominant media of power used by English, German and Italian commissioners.ConclusionsCommissioning practice worked in certain respects differently from what NHS commissioning policy assumed. It was often laborious and uncertain. In the four English case study sites financial and ‘real-side’ contract negotiations were partly decoupled, clinician involvement being least on the financial side. Tariff systems weakened commissioners’ capacity to choose providers and control costs. Commissioners adapted the systems to solve this problem. Our findings suggest a need for further research into whether or not differently owned providers (corporate, third sector, public, professional partnership, etc.) respond differently to health-care commissioners and, if so, what specific implications for commissioning practice follow. They also suggest that further work is needed to assess how commissioning practices impact on health system integration when care pathways have to be constructed across multiple providers that must tender competitively for work, perhaps against each other.FundingThe National Institute for Health Research Health Services and Delivery Research programme.

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“…Structural models of entry have been applied in health care (most recently by Maruyama 2011) and, for decades, to problems in nonhealth industries as well (e.g., Berry 1992;Seim 2006). Many of the reduced-form models employ the Herfindahl-Hirschman index (HHI) as an independent variable (Dafny and Duggan 2009;Bates and Santerre 2008;Schneider et al 2008;Shen, Wu, and Melnick 2010;Moriya, Vogt, and Gaynor 2010), as we do in our application. Though admittedly ad hoc, Gaynor and Town (2011) wrote that ''one can think of [such models] as attempting to capture the impacts of relative bargaining power on price, using buyer and seller HHIs as proxies for bargaining power.…”

Section: Approaches To Modeling Market Structurementioning

confidence: 99%

The Effects of Market Structure and Payment Rate on the Entry of Private Health Plans into the Medicare Market

Frakt

Pizer

Feldman³

2012

INQUIRY

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Private insurance firms participating in Medicare can offer up to three principal plan types: coordinated care plans (CCPs), prescription drug plans (PDPs), and private fee-for-service (PFFS) plans. Firms can make entry and marketing decisions separately across plan types and geographic regions. In this study, we estimate firm-level models of Medicare private plan entry using data from the years 2007 to 2009. Our models include a measure of market structure and separately identify CCP, PDP, and PFFS entry. We find evidence that entry barriers associated with CCP market concentration affect all three product types. We also find evidence of cross-product competition and common cost or demand factors that make entry with certain product combinations more likely. We predict that the market presence of CCPs and PFFS plans will decrease and that of PDPs will increase in response to payment reductions included in the new health reform law.Key questions in applied industrial organization pertain to the role of market structure in firms' entry decisions. A different set of inferences may be drawn about a market if concentration encourages entry rather than hinders it. On one hand, high market concentration suggests the existence of markups and a profit opportunity for potential entrants. On the other hand, incumbent firms may possess high market concentration due to barriers that preclude profitable entry of additional firms (Amel and Liang 1997). Thus, estimating the effect of market structure on entry provides a useful test of the presence of entry barriers. To our knowledge, no empirical analysis has been conducted that relates market structure to entry into the current, multiproduct Medicare private plan market.In this study, we estimate reduced-form, firm-level entry models for the three main Medicare private plan types: coordinated care plans (CCPs) (largely health maintenance organizations [HMOs] and preferred provider organizations [PPOs]), private fee-for-service (PFFS) plans, and stand-alone prescription drug plans (PDPs). In doing so, we investigate the relation between market structure

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Hospital prices and market structure in the hospital and insurance industries

Cited by 79 publications

References 40 publications

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

NHS commissioning practice and health system governance: a mixed-methods realistic evaluation

The Effects of Market Structure and Payment Rate on the Entry of Private Health Plans into the Medicare Market

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