Nazmi Sari
"Efficiency outcomes of market concentration and managed care"
JEL codes: C23, I11, L41
Keywords: competition, cost efficiency, managed care, panel data, stochastic frontier function

Abstract: The paper examines how hospital cost efficiency has reacted to extensive horizontal integrations of hospitals and rapid growth of managed care in the US health care industry. Cost efficiency is estimated by using panel data approaches to relax the assumptions for the hospital effects imposed in earlier studies. The paper shows that higher managed care penetration over time is associated with greater hospital efficiency, and higher market concentration is positively associated with efficiency when markets are highly competitive or highly concentrated.

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