ABSTRACT
The Federal Trade Commission (FTC or Commission) has been very active in enforcing antitrust laws in the health care field for the past two decades. The staff has investigated a wide variety of cases covering a broad range of restrictions on competition. These cases can be divided into three basic types of cases in health care: (1) mergers and acquisitions, (2) horizontal restraints cases or agreements among competitors, and (3) input market monopolization cases, such as hospital privileges cases. The Commission relies on both legal and economic analysis in all of these cases. As Chairman Steiger of the Federal Trade Commission has stated, antitrust policy has been "increasingly reshaped by analysis based on economic theory." This article attempts to explain the economic analysis used in antitrust enforcement as applied to the first two of the three types of health care cases. Section I presents the basic economic framework that is used to assess the competitive implications of health care mergers and acquisitions. Section II describes the analysis applied to other agreements among competitors in the health care field and briefly explains how this analysis differs in other health care cases.
Subject(s)
Antitrust Laws , Health Facility Merger/legislation & jurisprudence , United States Federal Trade Commission , Catchment Area, Health , Economic Competition/legislation & jurisprudence , Hospital Restructuring/legislation & jurisprudence , Models, Theoretical , United StatesABSTRACT
Interest in the efficiency or inefficiency of non-profit firms has spawned research on the administrative costs of Blue Cross and Blue Shield plans. Relying on plausible implications of the property rights theory of the firm, both Blair, Ginsburg, and Vogel (1975) and Vogel (1977) noted some evidence of inefficiency in these firms. Our analysis, however, utilizing their models and more recent data, reveals little convincing evidence for the view that Blue Shield plans are inefficient.
