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Local Hospital Competition in Large Metropolitan Areas

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  • Larry M. Manheim
  • Gloria J. Bazzoli
  • Min‐Woong Sohn

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.

Suggested Citation

  • Larry M. Manheim & Gloria J. Bazzoli & Min‐Woong Sohn, 1994. "Local Hospital Competition in Large Metropolitan Areas," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 143-167, March.
    • Handle: RePEc:bla:jemstr:v:3:y:1994:i:1:p:143-167
    DOI: 10.1111/j.1430-9134.1994.00143.x
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    References listed on IDEAS

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    1. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-131, June.
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    3. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 169-209, Spring.
    4. Rhee, Byong-Duk, et al, 1992. "Restoring the Principle of Minimum Differentiation in Product Positioning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(3), pages 475-505, Fall.
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    6. Zwanziger, Jack & Melnick, Glenn A. & Mann, Joyce M., 1990. "Measures of hospital market structure: a review of the alternatives and a proposed approach," Socio-Economic Planning Sciences, Elsevier, vol. 24(2), pages 81-95.
    7. Zwanziger, Jack & Melnick, Glenn A., 1988. "The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California," Journal of Health Economics, Elsevier, vol. 7(4), pages 301-320, December.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.

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