TY  - JOUR
AU  - Town,Robert
AU  - Wholey,Douglas
AU  - Feldman,Roger
AU  - Burns,Lawton R.
TI  - Did the HMO Revolution Cause Hospital Consolidation?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11087
PY  - 2005
Y2  - January 2005
UR  - http://www.nber.org/papers/w11087
L1  - http://www.nber.org/papers/w11087.pdf
N1  - Author contact info:
Robert Town
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: rtown@wharton.upenn.edu

Douglas Wholey
Health Services Research and Policy
School of Public Health
University of Minnesota
Mayo Mail Code 729,
420 Delaware Street  S.E.
Minneapolis, MN 55455-0392
E-Mail: whole001@umn.edu

Roger Feldman
Health Policy and Management
School of Public Health
University of Minnesota
Mayo Mail Code 729
420 Delware Street  S.E.
Minneapolis, MN 55455-0392
E-Mail: feldm002@umn.edu

Lawton Burns
Health Care Systems Department
The Wharton School
University of Pennsylvania
203 Colonial Penn Center
641 Locust Walk
Philadelphia, PA 19104-6218
E-Mail: burnsl@wharton.upenn.edu
AB  - During the 1990s US healthcare markets underwent a significant transformation. Managed care rose to become the dominant form of insurance in the private sector. Also, a wave of hospital consolidation occurred. In 1990, the mean population-weighted hospital Herfindahl-Hirschman Index (HHI) in a Health Services Area (HSA) was .19. By 2000, the HHI had risen to .26. This paper explores whether the rise in managed care caused the increase in hospital concentration. We use an instrumental variables approach with 10-year differences to identify the relationship between managed care penetration and hospital consolidation. Our results strongly imply that the rise of managed care did not cause the hospital consolidation wave. This finding is robust to a number of different specifications.
ER  -