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http://hdl.handle.net/2451/26188
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| Title: | Is The Medical Arms Race Still Present In Today's Managed Care Environment? |
| Authors: | James, Paul |
| Issue Date: | 2002 |
| Series/Report no.: | EC-02-09 |
| Abstract: | Prior to the emergence of managed care, the popular consensus and the
majority of research supported the idea that hospitals competed for
doctor affiliations and, through them, for patients by offering
specialized, high-tech services. This phenomenon was known as the
Medical Arms Race (MAR) and was facilitated by the reimbursement
practices of health insurance that were common at the time. With the
introduction of managed care and the Medicare Prospective Payment
System, however, hospitals were no longer able simply to pass on
inflated costs to their patients and began to concentrate on reducing
costs. This paper examines whether the MAR exists in the current managed
care environment. I investigate empirically whether the level of
competition in the market influences hospitals in their decision
concerning high-tech service provision using a sample of 15 high-tech
services across 57 Californian counties. We find that hospitals do take
into consideration the level of competition in their markets when
deciding whether or not to provide high-tech services, indicating that
managed care may not yet have extinguished the MAR. |
| URI: | http://hdl.handle.net/2451/26188 |
| Appears in Collections: | Economics Working Papers
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