The Effect of Hospital Mergers on HMO Hospital Costs and Premiums, 1995-2001

To what extent is hospital consolidation responsible for the resurgence of health care inflation in the late 1990s? The researchers identified the degree to which hospital consolidation has increased HMO hospital prices and HMO premiums, as well as the degree to which hospital consolidation is a function of HMO consolidation. They addressed the following questions: 1) How much hospital consolidation occurred from 1994 to 2001? Why did it occur? What was the effect of MCO market structure on hospital consolidation? 2) How much of the increase in hospital per diem charges for MCO enrollees from 1994 to 2001 can be attributed to hospital consolidation? and 3) How much of MCO premium increases from 1994 to 2001 can be attributed to hospital consolidation? The objective of the study was to provide increased knowledge about the impact of market consolidation to federal and state agencies responsible for antitrust enforcement.