ANTITRUST FOR ACCOUNTABLE CARE ORGANIZATIONS

Abstract

We simulated how the decision of a hypothetical hospital to form an Accountable Care Organization through the purchase of physicians in a hypothetical county would translate into changes in prices and spending. Our simulation was based on regression estimates of the effects of hospital ownership of physicians on hospital and physician prices and spending on hospital, physician, and all health services (including prescription drugs and outpatient diagnostic tests). Although the simulation does not evaluate a transaction that actually occurred in the real world, it illustrates whether and under what circumstances a stylized merger would have important effects on markets for health care. We found that such mergers can lead to statistically significant and economically meaningful increases in prices and spending. We also show that these mergers can affect patients differently depending on their local hospital market conditions. We conclude that policymakers should consider modifying the current approach to antitrust policy toward Accountable Care Organizations.