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82 Antitrust L.J. 533 (2018-2019)
A Review of the Economic Literature on Cross-Market Health Care Mergers

handle is hein.journals/antil82 and id is 545 raw text is: A REVIEW OF THE ECONOMIC LITERATURE ON CROSS-MARKET HEALTH CARE MERGERS KEITH BRAND TED ROSENBAUM* Several recent studies in the economics literature examine the price effects of cross-market mergers between health care providers in non-proximate geographies. These studies consider whether such mergers lead to higher prices even though the providers are not substitutes for patients at the point of service.2 Especially when taken together, the empirical analyses in this litera- ture provide credible evidence that prices have increased following such mergers.3 Given these findings, some have suggested that a broadened anti- trust enforcement agenda may be warranted.4 In general, recent merger enforcement in this area has focused on whether the health care providers involved in the merger are substitutes for patients at the point of service. Therefore, the analysis has primarily focused on whether a significant amount of patients at one of the parties would divert to the other party in the event of a network exclusion, and vice-versa. Under this analysis, * Keith Brand and Ted Rosenbaum are economists at the Federal Trade Commission. The views expressed in this article are those of the authors and do not necessarily reflect those of the Federal Trade Commission. We are grateful for comments from editors Nickolai Levin and Na- than Wilson as well as Dave Balan, Malcolm Coate, Chris Gannon, Paolo Ramezzana, David Schmidt, Mike Vita, and Brett Wendling. I Matthew S. Lewis & Kevin E. Pflum, Hospital Systems and Bargaining Power: Evidence from Out-of-Market Acquisitions, 48 RAND J. ECON. 579 (2017); Matt Schmitt, Multimarket Contact in the Hospital Industry, 10 AM. ECON. J.: EcoN. POL'Y 361 (2018); Gregory S. Vistnes & Yianis Sarafidis, Cross-Market Hospital Mergers: A Holistic Approach, 79 ANTITRUST L.J. 253 (2013); Leemore Dafny, Kate Ho & Robin S. Lee, The Price Effects of Cross-Market Hospi- tal Mergers (Nat'l Bureau of Econ. Research, Working Paper No. 22106, 2017) (forthcoming RAND J. ECON.). 2 While some of the theoretical issues we discuss here are also relevant for the combination of providers providing separate services (e.g., a pediatric hospital and a rehabilitation hospital), we do not focus on that type of cross-market merger in this article. Dafny et al., supra note 1; Lewis & Pflum, supra note 1. 4 Dafny et al., supra note 1, at 31. I In many applications, substitution between suppliers is measured by diversion ratios, which give the percentage of volume lost by one supplier under a small price increase that would be 533