The Hospital Market, Part 2. Professor Vivian Ho Health Economics Fall 2007. Structure: Putting it all Together. Is the hospital market competitive, or not? Case Study : UNITED STATES OF AMERICA, Plaintiff, vs. MERCY HEALTH SERVICES and FINLEY TRI-STATES HEALTH GROUP, INC. Defendants.
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Professor Vivian Ho
Is the hospital market competitive, or not?
UNITED STATES OF AMERICA, Plaintiff, vs. MERCY HEALTH SERVICES and FINLEY TRI-STATES HEALTH GROUP, INC. Defendants.
Dubuque population = 86,403
Mercy: 320 staffed beds, average daily census = 127.
Finley: 124 staffed beds, average daily census = 63.
Iowa City, Iowa
1) Where do Dubuque patients go for hospital care?
88% inside (Mercy or Finley)
2) Where are Mercy/Finley patients from?
76% inside (Dubuque)
Merger of Mercy and Finley would not/could not result in higher prices.
Hospital will spend more on advertising when: manner, an HMO that could successfully induce Dubuque area residents to use alternative hospitals would be at a significant cost advantage.”
How have price and quantity changed?
Source: U.S. Department of Labor, Bureau of Labor Statistics, CPI Detailed Report (various issues).
1) generous insurance
2) fee-for-service medicine
3) lack of profit motive
4) quality competition
Source: American Hospital Association, Hospital Statistics
Ratings of inappropriate use of 3 medical treatments among 1981 Medicare population, as defined by expert panel of MDs.
Procedure Inappropriate use(%)
coronary angiography 17%
carotid endarterectomy 32%
upper GI tract endoscopy 17%
Source: Marc L. Berk and Alan C. Monheit, “The Concentration of Health Expenditures: An Update,” Health Affairs 20 (Spring 2001), Exhibit 1.