Efforts to evaluate the plethora of recent programs adopted by public and private payers to promote hospital price competition critically depend on the availability of measures of local market structure. To gauge the ...
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Efforts to evaluate the plethora of recent programs adopted by public and private payers to promote hospital price competition critically depend on the availability of measures of local market structure. To gauge the effects of these policies, researchers must be able to delineate hospital market areas and measure the intensity of competition within these markets. This article reviews alternative methods that have been used to define hospital market areas and measure market structure. We propose an empirical patient origin-based method for measuring hospital market structure. The results of sensitivity analyses using data on California hospitals demonstrate the robustness of our measures over a broad range of parameter values.
Woolley (1989) attempted to analyze the competitive impact of horizontal hospital mergers using the 'event study' method. Woolley characterized his results as consistent with traditional 'oligopoly' th...
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Woolley (1989) attempted to analyze the competitive impact of horizontal hospital mergers using the 'event study' method. Woolley characterized his results as consistent with traditional 'oligopoly' theories of market behavior. We scrutinize in detail a large number of his events, however, and find that most either generated concentration increases too small to plausibly produce market power, or could not have conferred monopoly returns on firms improperly characterized as rivals. Accordingly, any observed abnormal returns are likely attributable to some other cause; we suggest some alternative interpretations of his results. Our paper highlights the need for care in the selection of events and the identification of rivals when applying the event study method to the analysis of mergers.
A notable lack of empirical analysis exists on hospital operations strategy in spite of widespread debate on quality, cost, and service delivery - issues which are widely included within the realm of operations compet...
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