Abstract
The healthcare industry is undergoing significant realignment driven by economic, policy, demographic, and other factors. Merging parties and enforcement agencies desire frameworks that capture full merger effects including quality, benefits, and efficiencies and provide reliable competitive effects predictions grounded in market realities. Market structure measures alone have proven poor predictors of anticompetitive effects or enforcement activity. Competitive effects analysis must (and the current models do not) reflect the incentives, ability, and impact of insurers' responses to post-merger pricing with adjustments to incentives and network structure that can control provider market power without diminishing efficiencies. It is imperative to alter current models for these insurer incentives and the differentiated hospital reimbursement bids that result in lower costs of care delivery. More comprehensive analysis of merger benefits and impact of patient steering toward high value and cost effective care will enrich economic analysis of mergers and improve reliability of competitive effects predictions.
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