This paper describes new stylized facts about business-to-business contracts based on a novel panel dataset describing one decade of hospital–insurer contracts in West Virginia. Typically, hospital–insurer and other business-to-business agreements are closely guarded trade secrets. The state made hospital–insurer contracts public records, allowing me to provide stylized facts and identify specific firms. The largest insurer, Highmark BCBS, would typically form three- and five-year agreements with relatively low prices. In contrast, smaller insurers — which in this context included Cigna, Aetna, and United — generally generally formed auto-renew contracts, which only committed to one year but which typically renewed for a a decade or longer, generally accompanied by rapid price growth. The work points to open questions around the drivers of contract dynamics. By documenting this unique dataset and stark dynamic implications, this research contributes to a larger understanding of vertical market dynamics and helps set the stage for future work.
Work in progress.