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Defining Hospital Markets – An Application to the German Hospital Sector

Author

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  • Hentschker, Corinna
  • Schmid, Andreas
  • Mennicken, Roman

Abstract

The correct definition of the product market and of the geographic market is a prerequisite for assessing market structures in antitrust cases. For hospital markets, both dimensions are controversially discussed in the literature. Using data for the German hospital market we aim at elaborating the need for differentiating the product market and at investigating the effects of different thresholds for the delineation of the geographic market based on patient flows. Thereby we contribute to the scarce empirical evidence on the structure of the German hospital market. We find that the German hospital sector is highly concentrated, confirming the results of a singular prior study. Furthermore, using a very general product market definition such as 'acute in-patient care' averages out severe discrepancies that become visible when concentration is considered on the level of individual diagnoses. In contrast, varying thresholds for the definition of the geographic market has only impact on the level of concentration, while the correlation remains high. Our results underline the need for more empirical research concerning the definition of the product market for hospital services.

Suggested Citation

  • Hentschker, Corinna & Schmid, Andreas & Mennicken, Roman, 2014. "Defining Hospital Markets – An Application to the German Hospital Sector," Ruhr Economic Papers 469, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:469
    DOI: 10.4419/86788529
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    Cited by:

    1. Hentschker, Corinna & Mennicken, Roman, 2014. "Selective-referral and unobserved patient heterogeneity - Bias in the volume-outcome relationship," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100299, Verein für Socialpolitik / German Economic Association.
    2. Pilny, Adam, 2014. "Mergers and Acquisitions in the German Hospital Market – Who are the Targets?," Ruhr Economic Papers 518, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. repec:zbw:rwirep:0518 is not listed on IDEAS
    4. repec:zbw:rwirep:0527 is not listed on IDEAS
    5. Corinna Hentschker & Roman Mennicken, 2014. "Selective-referral and Unobserved Patient Heterogeneity – Bias in the Volume-outcome Relationship," Ruhr Economic Papers 0527, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Schmid, Andreas & Varkevisser, Marco, 2016. "Hospital merger control in Germany, the Netherlands and England: Experiences and challenges," Health Policy, Elsevier, vol. 120(1), pages 16-25.
    7. Christoph Strumann & Alexander Geissler & Reinhard Busse & Christoph Pross, 2022. "Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(7), pages 1229-1242, September.
    8. Anne‐Fleur Roos & Ramsis R. Croes & Victoria Shestalova & Marco Varkevisser & Frederik T. Schut, 2019. "Price effects of a hospital merger: Heterogeneity across health insurers, hospital products, and hospital locations," Health Economics, John Wiley & Sons, Ltd., vol. 28(9), pages 1130-1145, September.
    9. Adam Pilny, 2014. "Mergers and Acquisitions in the German Hospital Market – Who are the Targets?," Ruhr Economic Papers 0518, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Mennicken, Roman & Kolodziej, Ingo W.K. & Augurzky, Boris & Kreienberg, Rolf, 2014. "Concentration of gynaecology and obstetrics in Germany: Is comprehensive access at stake?," Health Policy, Elsevier, vol. 118(3), pages 396-406.
    11. Esra Eren Bayindir & Jonas Schreyögg, 2021. "What drives different treatment choices? Investigation of hospital ownership, system membership and competition," Health Economics Review, Springer, vol. 11(1), pages 1-14, December.

    More about this item

    Keywords

    hospital market; concentration; product market; geographic market; Germany;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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