Competition in the Market for Hospital Services-Part 1

Topics:
(1) Competition in the Market for Hospital Services-Part 1
Lesson Objectives:
(1) To compare and contrast the commonly used methods for defining geographic
and product markets for hospital services.
(2) To learn how to compute a Herfindahl-Hirschman Index and a concentration ratio
to assess market power, and to be able to interpret the value of these measures.
(3) To assess hospital strategies for expanding market share.
(4) To assess how hospital competition affects prices and quality.
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Readings:
Baker, L. “Measuring Competition in Health Care Markets.” Health Services Research,
April 2001, Part II, 36(1): 223-251.
*Nakamura, Capps, and Dranove. “Patient Admission Patterns and Acquisitions of
“Feeder” Hospitals.” Journal of Economics and Management Strategy, 2007, 16(4): 995-
1030.
Vogt, W. and R. Town. “How has hospital consolidation affected the price and quality of
hospital care?” Robert Wood Johnson Foundation Synthesis Project, February 2006.
Gaynor, M. and R. Town. “The impact of hospital consolidation – Update.” Robert Wood
Johnson Foundation Synthesis Project, June 2012.
Carrier, E. M. Dowling, and R. Berenson. “Hospitals’ Geographic Expansion in Quest of
Well-Insured Patients: Will the Outcome Be Better Care, More Cost or Both? Health
Affairs, 2012, 31(4): 827-835.
Supplemental Resources:
Laine, C. “The Herfindahl-Hirschman index: a concentration measure taking the
consumer’s point of view.” The Antitrust Bulletin, Summer 1995: 423-432.
Porter, M. “The Five Forces that Shape Strategy.” Harvard Business Review, January
2008, pp. 78-93.

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