Updated Variable-Radius Measures of Hospital Competition (original) (raw)
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Socio-Economic Planning Sciences, 1990
Efforts to evaluate the plethora of recent programs adopted by public and private payers to promote hospital price competition critically depend on the availability of measures of local market structure. To gauge the effects of these policies, researchers must be able to delineate hospital market areas and measure the intensity of competition within these markets. This article reviews alternative methods that have been used to define hospital market areas and measure market structure. We propose an empirical patient origin-based method for measuring hospital market structure. The results of sensitivity analyses using data on California hospitals demonstrate the robustness ofour measures over a broad range of parameter values.
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The Journal of Socio-Economics, 1999
In response to dramatic rises in health care costs, policymakers have been debating the relative merits of competitive strategies as a means of containing costs. We study the 29 largest metropolitan statistical areas for 1991, and controlling for environmental conditions in each market, we examined the impact of competition on hospital costs. We conclude that competition had a significant positive impact on overall hospital costs.
Local Hospital Competition in Large Metropolitan Areas
Journal of Economics <html_ent glyph="@amp;" ascii="&"/> Management Strategy, 1994
This paper uses origin-destination data to define geographic local hospital markets in large metropolitan statistical areas (MSAs). Results support past findings of service rather than price competition, with negatiue-cost Herfandahl-Hirschman indexes relationships at the market Ieuel ( a i d sub-MSA level) and with profit margins izegafiuely related to hospital market competition. The effects of total (direct plus indirect) market competition are unchanged between 1983 and 1988, precisely estimated, robust to estimation techniques, and unaffected by whether the number of direct competitors is included as an explanatory variable.
Competition among hospitals and its measurement: Theory and a case study
2010
In recent years, the studies related to the healthcare market, place emphasis on the importance of healthcare competition in terms of high quality services and decreases in the amount of healthcare expenses. To this end, many economists and policy makers recommend different strategies related to competition among hospitals and health systems in the healthcare market. In this paper, to measure the competition level of healthcare market, we use such factors as; determination of competitors and services delivered by hospitals, determination of market scope and the measurement method of basic competition, demonstrating the role of insurance companies. In this respect, HHI index exhibiting the concentration in local level is used in order to measure competition level among hospitals. Consequently, it is concluded that an oligopoly structure exists in hospital market.
The RAND Journal of Economics, 2003
Our objective is to determine the effect of ownership type (for-profit, not-for-profit, government) on firm conduct in hospital markets. Secondary objectives include estimating hospital demand systems useful for market definition and merger simulation. To this end, we estimate a structural model of demand and pricing in the short term hospital industry in California, and then use the estimates to simulate the effect of a merger. Demand is modeled at the level of individual consumers using discrete choice techniques and micro data on individuals. Price in the demand equation is endogenous, and we use recently developed instrumental variables techniques to correct for this. We allow the behavior of for-profit and not-for-profit firms to differ, modeling these differences structurally following the relevant theory literature. We find that California hospitals in 1995 faced a downward-sloping demand for their products, with an average price elasticity of demand of -5.67.
Do Market-Level Hospital and Physician Resources Affect Small Area Variation in Hospital Use?
Medical Care Research and Review, 1999
This study evaluates the effect of market-level physician and hospital resources on hospital use. It is anticipated that higher hospital discharges are associated with (1) greater hospital and physician resources, (2) more differentiated hospital and physician resources, and (3) higher levels of teaching intensity in the community. Data on 14 modified diagnostically related groups (DRGs) and 58 hospital market communities in Michigan are analyzed during a 7-year period. Findings indicate that physician resources, hospital resources, differentiation of hospital and physician resources, and teaching intensity contribute only modestly to discharges, holding constant the socioeconomic attributes of the community and adjusting for the variation in hospital use over time. With the inclusion of hospital and physician resource variables, socioeconomic factors remain important determinants of the variation across market communities. Findings are discussed in terms of their implications for health care organizations, managed care programs, and cost control efforts in general.
Specialty hospital market proliferation
Health Care Management Review, 2010
Background: Since the early 1990s, specialty hospitals have been continuously increasing in number. A moratorium was passed in 2003 that prohibited physicians' referrals of Medicare patients to newly established specialty hospitals if the physician has ownership stakes in the hospital. Although this moratorium expired in effect in 2007, many are still demanding that the government pass new policies to discourage the proliferation of specialty hospitals. Purpose: This study aimed at examining the regulatory and environmental forces that influence specialty hospitals founding rate. Specifically, we use the resource partitioning theory to investigate the relationship between general hospitals closure rates and the market entry of specialty hospitals. This study will help managers of general hospitals in their strategic thinking and planning. Methodology: We rely on secondary data resources, which include the American Hospital Association, Area Resource file, census, and Center for Medicare and Medicaid Services data, to perform a longitudinal analysis of the founding rate of specialty hospital in the 48 states. Specifically, we use the negative binomial generalized estimating equation approach available through Stata 9.0 to study the effect of general hospitals closure rate and environmental variables on the proliferation of specialty hospitals. Findings: Specialty hospitals founding rate seems to be significantly related to general hospitals closure rates. Moreover, results indicate that economic, supply, regulatory, and financial conditions determine the founding rate of specialty hospitals in different states. Practice Implications: The results from this study indicate that the closure of general hospitals creates market conditions that encourage the market entry of specialized health care delivery forms such as specialty hospitals. Managers of surviving general hospitals have to view the closure of other general hospitals not just as an opportunity to increase market share but also as a threat of competition from new forms of health care organizations.
Entry and Competition in Local Hospital Markets
Journal of Industrial Economics, 2007
There has been considerable consolidation in the hospital industry in recent years. Over 900 deals occurred from 1994-2000, and many local markets, even in large urban areas, have been reduced to monopolies, duopolies or triopolies. This surge in consolidation has led to concern about its effect on competition in local markets for hospital services. In this paper we examine the impact of market structure on competition in local hospital markets -specifically, does competition increase with the number of firms? We extend the entry model developed by Bresnahan and Reiss to make use of quantity information and apply it to data on the US hospital industry. The results from the estimation are striking. In the hospital markets we examine, entry leads to markets quickly becoming competitive. Entry reduces variable profits and increases quality. Indeed, most of the effects of entry come from having a second and possibly a third firm enter the market. The use of quantity information allows us to infer that entry is welfare increasing.
Trends in hospital efficiency among metropolitan markets
1999
This study evaluates trends in efficiency among American hospital markets. A total of 6010 hospitals were identified for use in the analysis from the American Hospital Association's Annual Surveys for 1989 and 1993. Using data envelopment analysis (DEA), a longitudinal study of hospital efficiency was conducted on all 314 metropolitan markets in the United States. Results suggest that large hospital markets generally demonstrated higher inefficiency. The major inefficiencies exist in the availability of hospital services, the number of operating beds, the utilization of hospital staffing and operating expenses. Consequently, the large hospital market had a significant excess of health manpower that resulted in inefficiency that amounted to approximately $23 billion. From a policy perspective, this study has shed some light on the need to establish more specific policies to address inefficiency in the health care industry.