Hospital consolidation and negotiated PPO prices

Cory Capps*, David Dranove

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

72 Scopus citations


We examine the effects of hospital consolidation on the actual prices paid by preferred provider organizations. We find that price increases following consolidations among nearby hospitals invariably equaled or exceeded median price increases among other hospitals in the same market. Using multivariate regression analysis, we find that consolidation enables hospitals to increase prices in three of the four markets studied; these increases are generally statistically significant. In the remaining market, the measured effect was zero. Our results suggest that some, but not all, consolidations of competing hospitals facilitate price increases. We conclude that antitrust scrutiny of hospital consolidation is warranted.

Original languageEnglish (US)
Pages (from-to)175-181
Number of pages7
JournalHealth Affairs
Issue number2
StatePublished - 2004

ASJC Scopus subject areas

  • General Medicine


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