Health Economics: Theory, Econometrics, and Data
Saturday, Jan. 5, 2019 2:30 PM - 4:30 PM
- Chair: Neale Mahoney, University of Chicago
How Acquisitions Affect Firm Behavior and Performance: Evidence from the Dialysis Industry
AbstractMany markets have become increasingly concentrated through mergers and acquisitions, which in health care may have important consequences for spending and outcomes. Using a rich panel of Medicare claims data for nearly one million dialysis patients, we advance the literature on the effects of mergers and acquisitions by studying the precise ways in which providers change their behavior following an acquisition. We base our empirical analysis on more than 1,200 acquisitions of independent dialysis facilities by large chains over a twelve-year period, and find that chains transfer several prominent strategies to the facilities they acquire. Most notably, acquired facilities converge to the behavior of their new parent companies by increasing patients' doses of highly reimbursed drugs, replacing high-skill nurses with less-skilled technicians, and waitlisting fewer patients for kidney transplants. We then show that patients fare worse as a result of these changes: outcomes such as hospitalizations and mortality deteriorate, with our long panel allowing us to identify these effects from within-facility or within-patient variation around the acquisitions. Because overall Medicare spending increases at acquired facilities, mostly as a result of higher drug reimbursements, this decline in quality corresponds to an unambiguous decline in value for payers. We conclude our paper by linking these effects to measures of local market concentration, finding that an increase in market power cannot explain the decline in quality. Rather, the adoption of the acquiring firm's strategies and practices drives our main results.
An Empirical Framework for Sequential Assignment: The Allocation of Deceased Donor Kidneys
AbstractAn Empirical Framework for Sequential Assignment: The Allocation of Deceased Donor Kidneys
Nonparametric Estimates of the Demand for Health Insurance Among Low-Income Adults
AbstractWe develop a nonparametric discrete choice model and use it to estimate the demand for health insurance tiers in the California Affordable Care Act marketplace. The main restriction of the model is that utility is quasilinear with respect to prices. In contrast to most of the related literature, we do not assume that the unobserved components of utility are distributed according to a parametric family. Instead, we consider a set of instrumental variable and bounded variation assumptions, then we provide a method for computing sharp bounds on counterfactual choice probabilities and changes in consumer surplus. Using the new method, we estimate that a $10 increase in monthly premiums would cause between a 5% and 13% decline in the proportion of low-income adults with coverage. The reduction in total annual consumer surplus from such a price increase would be between $47 and $56 million. Our estimates of price sensitivity are substantially greater than in comparable logit models.
- I1 - Health
- L1 - Market Structure, Firm Strategy, and Market Performance