Working Paper: NBER ID: w10437
Authors: Avi Dor; Siran M. Koroukian; Michael Grossman
Abstract: The paper examines price discounting by health maintenance organizations and preferred provider organizations in markets for hospital services. Our empirical analysis focuses on transaction prices for angioplasty, which is a relatively common procedure, with well defined 'product' characteristics. After controlling for patient and procedure heterogeneity and market power we find that on average prices for PPOs are 8% lower than fee-for-service plans, followed by point-of-service HMOs who capture a 24% discount. Our results are in general agreement with earlier work that shows that managed care discounts are 'real', after accounting for process of care.
Keywords: managed care; hospital pricing; angioplasty; health maintenance organizations; preferred provider organizations
JEL Codes: I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Managed Care Participation (I11) | Lower Prices for Procedures (P22) |
| HMO Penetration (I11) | Lower Prices (P22) |
| Market Concentration (L11) | Higher Prices (D49) |
| Managed Care Plan Types (I13) | Transaction Prices (P22) |