The paper examines price discounting by health maintenance organizations and preferred provider organizations in markets for hospital services. Our empirical analysis focuses on transaction prices for angioplasty, which is a relatively common procedure, with well defined 'product' characteristics. After controlling for patient and procedure heterogeneity and market power we find that on average prices for PPOs are 8% lower than fee-for-service plans, followed by point-of-service HMOs who capture a 24% discount. Our results are in general agreement with earlier work that shows that managed care discounts are 'real', after accounting for process of care.
*Published:
Dor, Avi, Siran M. Koroukian and Michael Grossman. "Managed Care Discounting: Evidence From The MarketScan Database," Inquiry - Excellus Health Plan, 2004, v41(2,Summer), 159-169.
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