Competition Between Public and Private Maternity Care Providers in France: Evidence on Market Segmentation

The French market for hospital care is shared by public and private providers. In addition to covering a number of mandates usually not undertaken by the private sector such as training, research, and disease prevention, public hospitals are required to provide basic care across the French territory. To investigate the existence of market segmentation between public and private care providers, we focus on maternity care and first examine to what extent public and private maternity units substitute each other on an extensive margin, to then analyze how competition plays out on an intensive margin. Consistent with the public mandate, our findings indicate that, after a private unit closure, public maternity units are less likely to exit a low-populated area than a high-populated area. In addition, we find evidence of an asymmetric intensive margin substitution between private and public maternity units. Maternity users tend to substitute private units (non for-profit and for-profit) for public units more often than the reverse.