Health Economics And Antitrust Literature

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Significance of this Study
This essay contributes to health economics and antitrust literature as follows. First, this essay investigates change in transaction price for cardiac surgery. Instead of using list or average prices, this analysis adopted the transaction price of care, which is a much more accurate measure for price of care (Brooks, Dor & Wong, 1997; Capps & Dranove, 2004; Dor, Grossman & Koroukian, 2004; Dor, Koroukian & Grossman, 2004; Dor et al., 2012; Moriya, Vogt & Gaynor, 2010). Second, this essay applies the comprehensive taxonomy of health systems proposed by Bazzoli et al. (1999) to post-merger pricing studies. Existing studies on post-merger change in price of care have focused more on the size of system formation,
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According to the revised Statements of Antitrust Enforcement Policy in Health Care, health care provider arrangements with a sufficient degree of financial and clinical integration are eligible for the antitrust safety zone (Department of Justice and Federal Trade Commission, 1996). However, the FTC and DOJ have been criticized for not giving clear definitions of clinical integration, and providers have been puzzled about the adequate level of clinical integration that FTC and DOJ will not view as illegal, per se (Burke & Rosenbaum, 2010; Leibenluft, 2011). Considering a paucity of empirical literature on appropriate degrees of financial and clinical integration, the findings of this essay can contribute to the antitrust discussions in health care. 3. Conceptual Framework
Several models of health care pricing exist in the literature, and there are clear trade-offs among the models (Dor, Grossman & Koroukian, 2004; Gaynor & Town, 2011; Gowrisankaran, Nevo & Town, 2013). These pricing models are summarized in the previous essay. This study chose a modified version of Dor, Koroukian & Grossman (2004), because 1) this model does not require restrictive assumptions; 2) this model allows more flexible functional forms; 3) this model does not depend on inaccessible data, including marginal cost of care or profit margin of a hospital. In the conceptual framework of this study, the price of care is defined as a function of patient characteristics, hospital
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