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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.

Suggested Citation

  • Frech, Ted E, 1998. "Managed Care, Distance Traveled, and Hospital Market Definition," University of California at Santa Barbara, Economics Working Paper Series qt84x5q49q, Department of Economics, UC Santa Barbara.
  • Handle: RePEc:cdl:ucsbec:qt84x5q49q
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    References listed on IDEAS

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    1. Burns, Lawton R. & Wholey, Douglas R., 1992. "The impact of physician characteristics in conditional choice models for hospital care," Journal of Health Economics, Elsevier, vol. 11(1), pages 43-62, May.
    2. Robinson, James C. & Phibbs, Ciaran S., 1990. "An evaluation of Medicaid selective contracting in California," Journal of Health Economics, Elsevier, vol. 8(4), pages 437-455, February.
    3. Gregory Vistnes, 1994. "An Empirical Investigation of Procurement Contract Structures," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 215-241, Summer.
    4. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
    5. 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, vol. 3(2), pages 159-168, April.
    6. 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, vol. 1(1), pages 77-93.
    7. William White & Michael Morrisey, 1998. "Are Patients Traveling Further?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(2), pages 203-221.
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    Cited by:

    1. Martin Gaynor & Deborah Haas-Wilson, 1999. "Change, Consolidation, and Competition in Health Care Markets," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 141-164, Winter.
    2. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487 Elsevier.
    3. John Simpson, 2003. "Geographic markets in hospital mergers: a case study," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 10(3), pages 291-303.
    4. Litaker, David & Love, Thomas Ezra, 2005. "Health care resource allocation and individuals' health care needs: examining the degree of fit," Health Policy, Elsevier, vol. 73(2), pages 183-193, August.

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