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Managed Care, Distance Traveled, and Hospital Market Definition

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  • Frech, Ted E

Abstract

Most scholars and antitrust cases have defined hospital service markets as primarily local. But, two recent decisions have greatly expanded geographic markets, incorporating hospitals as far as 100 miles apart. Managed care plans, now important in most markets, were believed to shift patients to distant hospitals to capture lower prices. We examine distance traveled and its connection to managed care penetration. In contrast to earlier literature, we examine both direct and indirect effects. We find that increases in managed care have impacted distances traveled, but these effects are too small to justify much change in geographical markets for research or antitrust law.

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Bibliographic Info

Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt84x5q49q.

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Date of creation: 21 Jul 1998
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Handle: RePEc:cdl:ucsbec:qt84x5q49q

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Keywords: Managed Care; Distance Traveled; Hospital Market Definition;

References

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  1. Lee Rivers Mobley & H. E. Frech, 1994. "Firm Growth and Failure in Increasingly Competitive Markets Theory and Application to Hospital Markets," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 1(1), pages 77-93.
  2. Gregory Vistnes, 1994. "An Empirical Investigation of Procurement Contract Structures," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 25(2), pages 215-241, Summer.
  3. William White & Michael Morrisey, 1998. "Are Patients Traveling Further?," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 5(2), pages 203-221.
  4. Burns, Lawton R. & Wholey, Douglas R., 1992. "The impact of physician characteristics in conditional choice models for hospital care," Journal of Health Economics, Elsevier, Elsevier, vol. 11(1), pages 43-62, May.
  5. Robinson, James C. & Phibbs, Ciaran S., 1990. "An evaluation of Medicaid selective contracting in California," Journal of Health Economics, Elsevier, Elsevier, vol. 8(4), pages 437-455, February.
  6. Lee, Hau L & Cohen, Morris A, 1985. "A Multinomial Logit Model for the Spatial Distribution of Hospital Utilization," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 3(2), pages 159-68, April.
  7. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
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Cited by:
  1. Martin Gaynor & William B. Vogt, . "Antitrust and Competition in Health Care Markets," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 1999-E29, Carnegie Mellon University, Tepper School of Business.
  2. Martin Gaynor & Deborah Haas-Wilson, . "Change, Consolidation, and Competition in Health Care Markets," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 1999-E31, Carnegie Mellon University, Tepper School of Business.
  3. John Simpson, 2003. "Geographic markets in hospital mergers: a case study," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 10(3), pages 291-303.

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