Anil Bamezai

The effects of market structure and bargaining position on hospital prices

PPOs and HMOs have gained widespread acceptance due in part to the belief that excess capacity and competitive market conditions can be leveraged to negotiate lower prices with health care providers. We investigated prices obtained in different types of markets by the largest PPO in California. Our findings indicate that greater hospital competition leads to lower prices. Furthermore, as the importance of a hospital to the PPO in an area increases, the price rises substantially. Our testing of alternative methods for defining hospital geographic markets reveals that the common practice of using counties to define the market leads to an underestimate of the price-increasing effects of a merger.

Price competition and hospital cost growth in the United States (1989–1994)

In recent years, most health care markets in the United States (US) have experienced rapid penetration by health maintenance organizations (HMOs) and preferred provider organizations (PPOs). During this same period, the US has also experienced slowing health care costs. Using a national database, we demonstrate that HMOs and PPOs have significantly restrained cost growth among hospitals located in competitive hospital markets, but not so in the case of hospitals located in relatively concentrated markets. In relative terms, we estimate that HMOs have contained cost growth more effectively than PPOs.

Hospital competition, resource allocation and quality of care

BackgroundA variety of approaches have been used to contain escalating hospital costs. One approach is intensifying price competition. The increase in price based competition, which changes the incentives hospitals face, coupled with the fact that consumers can more easily evaluate the quality of hotel services compared with the quality of clinical care, may lead hospitals to allocate more resources into hotel rather than clinical services.MethodsTo test this hypothesis we studied hospitals in California in 1982 and 1989, comparing resource allocations prior to and following selective contracting, a period during which the focus of competition changed from quality to price. We estimated the relationship between clinical outcomes, measured as risk-adjusted-mortality rates, and resources.ResultsIn 1989, higher competition was associated with lower clinical expenditures levels compared with 1982. The trend was stronger for non-profit hospitals. Lower clinical resource use was associated with worse risk adjusted mortality outcomes.ConclusionsThis study raises concerns that cost reductions may be associated with increased mortality.

Marginal cost of emergency department outpatient visits: an update using California data.

Objective:We sought to clarify the importance of time frame in the measurement of marginal cost and to provide marginal cost estimates for outpatient emergency department (ED) visits that better reflect current economic conditions. Data Sources:Analyses are based upon data that California hospitals report to the Office of Statewide Health Planning and Development (OSHPD). The time period covered was 1990 through 1998. Hospitals without EDs, or hospitals designated as trauma centers, were excluded from the analysis. Study Design:Nine years of panel data were used to estimate hospital cost functions, which were then used to test for economies of scale and to derive estimates of both short- and long-run marginal costs (excluding the physician expense component). Principal Findings:We found only weak evidence in favor of scale economies and, in that context, we argue that long-run marginal costs should be the preferred metric for judging the cost of treating outpatient ED visitors. We estimate these long-run costs (in 1998 dollars) to be roughly

The relationship between safety net activities and hospital financial performance

348 per visit for large urban hospitals,

A profile of uncompensated hospital care, 1983-1995

288 for other urban hospitals,

Future emission scenarios for chemicals that may deplete stratospheric ozone

203 for rural hospitals, and

Uncompensated care: hospitals' responses to fiscal pressures

314 overall. Conclusions:Our results suggest that the marginal cost of an outpatient ED visit is larger than is commonly believed. A key implication of this finding is that hospital administrators need to think more carefully about their nonurgent care policies, especially as they pertain to ED operations.

Emergency Department Capacity And Access In California, 1990-2001: An Economic Analysis

BackgroundDuring the 1990s hospitals in the U.S were faced with cost containment charges, which may have disproportionately impacted hospitals that serve poor patients. The purposes of this paper are to study the impact of safety net activities on total profit margins and operating expenditures, and to trace these relationships over the 1990s for all U.S urban hospitals, controlling for hospital and market characteristics.MethodsThe primary data source used for this analysis is the Annual Survey of Hospitals from the American Hospital Association and Medicare Hospital Cost Reports for years 1990-1999. Ordinary least square, hospital fixed effects, and two-stage least square analyses were performed for years 1990-1999. Logged total profit margin and operating expenditure were the dependent variables. The safety net activities are the socioeconomic status of the population in the hospital serving area, and Medicaid intensity. In some specifications, we also included uncompensated care burden.ResultsWe found little evidence of negative effects of safety net activities on total margin. However, hospitals serving a low socioeconomic population had lower expenditure raising concerns for the quality of the services provided.ConclusionsDespite potentially negative policy and market changes during the 1990s, safety net activities do not appear to have imperiled the survival of hospitals. There may, however, be concerns about the long-term quality of the services for hospitals serving low socioeconomic population.