Incorporating health care quality into health antitrust law

Nicholas C, Petris Center on Health Care Markets & Consumer Welfare, University of California at Berkeley, Berkeley, CA 94720, USA .
BMC Health Services Research (Impact Factor: 1.71). 02/2008; 8(1):89. DOI: 10.1186/1472-6963-8-89
Source: PubMed


Antitrust authorities treat price as a proxy for hospital quality since health care quality is difficult to observe. As the ability to measure quality improved, more research became necessary to investigate the relationship between hospital market power and patient outcomes. This paper examines the impact of hospital competition on the quality of care as measured by the risk-adjusted mortality rates with the hospital as the unit of analysis. The study separately examines the effect of competition on non-profit hospitals.
We use California Office of Statewide Health Planning and Development (OSHPD) data from 1997 through 2002. Empirical model is a cross-sectional study of 373 hospitals. Regression analysis is used to estimate the relationship between Coronary Artery Bypass Graft (CABG) risk-adjusted mortality rates and hospital competition.
Regression results show lower risk-adjusted mortality rates in the presence of a more competitive environment. This result holds for all alternative hospital market definitions. Non-profit hospitals do not have better patient outcomes than investor-owned hospitals. However, they tend to provide better quality in less competitive environments. CABG volume did not have a significant effect on patient outcomes.
Quality should be incorporated into the antitrust analysis. When mergers lead to higher prices and lower quality, thus lower social welfare, the antitrust challenge of hospital mergers is warranted. The impact of lower hospital competition on quality of care delivered by non-profit hospitals is ambiguous.

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Available from: Helen Schneider, Apr 08, 2014
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    • "Whether existing indicators capture what they purport to measure is yet to be evaluated. There are various methods for eliciting proxies for quality measures in healthcare, including for hospitals (see, e.g., Newhouse, 1970; Akin et al., 1995; Grabowski, 2001; Jappelli et al., 2007; Schneider, 2008; Lichtenberg, 2011). Our paper exploits the relatively less controversial method of modeling quality using the modified price. "
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