The authors discuss how differences between patient and insurer perspectives could create “cross-market” effects.
“Cross-market” mergers can be defined as health system mergers, or components of these mergers, that combine providers that are not substitutes from the point of view of patients, but may still cause price increases. Recent actions by the FTC and the California Attorney General reflect growing attention placed on mergers that expand healthcare systems, even when such mergers combine providers that are unlikely to compete for inpatient discharges.
In this article, authors Dina Older Aguilar, Andrew Sfekas, and Arthur Corea-Smith of Cornerstone Research and Shannon Wu of the American Hospital Association discuss the following aspects of cross-market effects:
- the impact of the insurer perspective in standard hospital merger analysis.
- how economic models of insurer behavior can generate potential cross-market effects.
- two types of scenarios in which provider mergers may impact provider-insurer negotiations, without combining hospital systems that patients would consider close substitutes.
This article was originally published in Competition Policy International’s Antitrust Chronicle in May 2022.
The views expressed herein do not necessarily represent the views of Cornerstone Research.