Is the Impact of Managed Care on Hospital Prices Decreasing?
The researchers examined how demand and supply affect prices for inpatient care for privately insured patients in California and Florida. In particular, they determined whether the underlying assumptions about managed care's ability to control costs have changed. Their research: 1) updated findings on the effects of provider consolidation; 2) tested the relationship between consumer choice and price; and 3) provided a basis for considering the degree to which changes in supply and demand in hospital markets have contributed to price increases. The objective of the project was to better understand the factors affecting managed care's ability to control prices so that appropriate incentives can be implemented.