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Local Hospital Competition in Large Metropolitan Areas

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  • Manheim, Larry M
  • Bazzoli, Gloria J
  • Sohn, Min-Woong

Abstract

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 negative-cost Herfandahl-Hirschman indexes relationships at the market level (and sub-MSA level) and with profit margins negatively 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. Copyright 1994 by MIT Press.

Suggested Citation

  • Manheim, Larry M & Bazzoli, Gloria J & Sohn, Min-Woong, 1994. "Local Hospital Competition in Large Metropolitan Areas," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 143-167, Spring.
    • Handle: RePEc:bla:jemstr:v:3:y:1994:i:1:p:143-67
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    Cited by:

    1. Propper, Carol & Burgess, Simon & Green, Katherine, 2004. "Does competition between hospitals improve the quality of care?: Hospital death rates and the NHS internal market," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1247-1272, July.
    2. Rexford E. Santerre & John A. Vernon, 2006. "The consumer welfare implications of the hospital ownership mix in the US: an exploratory study," Health Economics, John Wiley & Sons, Ltd., vol. 15(11), pages 1187-1199, November.
    3. Daniel P. Kessler & Mark B. McClellan, 1999. "Is Hospital Competition Socially Wasteful?," NBER Working Papers 7266, National Bureau of Economic Research, Inc.
    4. Daniel Kessler & Mark McClellan, 1999. "Designing Hospital Antitrust Policy to Promote Social Welfare," NBER Working Papers 6897, National Bureau of Economic Research, Inc.
    5. Laurie Bates & Rexford Santerre, 2008. "Do health insurers possess monopsony power in the hospital services industry?," International Journal of Health Economics and Management, Springer, vol. 8(1), pages 1-11, March.
    6. Joy Grossman & Dwayne Banks, 1998. "Unrestricted Entry and Nonprice Competition: The Case of Technological Adoption in Hospitals," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(2), pages 223-245.

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