PRICE EFFECTS OF A MERGER: EVIDENCE FROM A PHYSICIANS' MARKET

The relationship between physician concentration and prices is of interest to policy makers, public health officials, and insurers. We examine how a merger of orthopaedic physicians in Berks County, Pennsylvania, affected prices. We use claims-level data from three private payors in the region to compare the price changes of the merged practices to those in nearby areas plausibly not affected by the merger. The merged practices increased prices to two of the three payors by 10-20%, while prices in the control geographies remained largely unchanged, on average, suggesting prices increased due to postmerger increases in market power.(JELI13, K21, L4)