From Regional to Local Markets: Network Study of Competition in CaliforniaHospital Markets. Abstract, Executive Summary and Dissertation

摘要

The objective of the study is to develop a methodology of defining hospitalmarkets using network analysis approach. It relies on four indicators of competition: geographic distance, service duplication, size differential, and patient flow. They are combined into a single index that indicates the strength of competition between two hospitals. This index is computed for all pairs of hospitals and used to partition hospitals into non-overlapping markets based on the maximum closure of each group of competitors. The method defines efficient markets in which only hospital with real competitive presence are included. A comparison of methods shows that substantial differences exist among them. The 15-mile radius and the maximum closure approaches are more similar to each other than they are to Zwanziger's. The author found that the number competitors or the concentration ratio were not significantly associated with hospital cost per admission, while higher competition against the nearest neighbor was negatively associated with lower cost. The new reimbursement system and market-oriented policies since the early 1980s have made the health care industry more competitive. In this new market environment, hospitals become more responsive to direct and local competition than to diffuse and regional competition.