Market power and hospital pricing: Are nonprofits different?

Dramatic changes in hospitals' operating environments are leading to major restructuring of hospital organizations. Hospital mergers and acquisitions are increasing each year, and conversions by hospitals to different forms o f ownership also are continuing apace. Such changes require policymakers an d regulators to develop and implement policies to ensure that consumers' in terests are protected. An important consideration in this process is the im pact on the price of hospital care following such transactions. This paper reviews empirical evidence that mergers that reduce competition will lead t o price increases at both merging hospitals and their competitors, regardle ss of ownership status. We show that nonprofit and government hospitals hav e steadily become more willing to raise prices to exploit market power and discuss the implications for antitrust regulators and agencies that must ap prove nonprofit conversions.