Do Different Measures of Hospital Competition Matter in Empirical Investigations of Hospital Behavior

Abstract

Considerable controversy exists about the appropriate way hospital competition should be measured and whether findings are accurate if certain methods are employed. Data from the Healthcare Cost and Utilization Project (HCUP), the American Hospital Association (AHA), and other supplemental data sources are used to create and evaluate hospital competition measures. Correlation coefficients of these measures are assessed. Moreover, each measure is independently included as an explanatory variable in otherwise identical hospital cost function regressions. Their corresponding parameter estimates are then compared. Most measures are highly correlated. Inferences about the effect of competition on hospital cost remain the same when alternative hospital competition measures are employed. We caution researchers against using this finding to arbitrarily select a competition measure when the magnitude of the estimates is important. Copyright Springer 2004hospital competition measures, hospital markets,

Can Competition Save Your Life?

“…They found that the method of constructing HHI did not affect their estimates of the effect of competition on hospital costs. We believe that our two alternative measures of HHI will capture the effect of competition on patient outcomes although the magnitude of the effect may be different, as was found by Wong et al (2005).…”

“…However, a recent study by Wong et al (2005) calculated hospital competition index using county, MSA, health service area (as done in this study), fixed radius and variable radius measures. They found that the method of constructing HHI did not affect their estimates of the effect of competition on hospital costs.…”

Monopsony power in the market for health insurance in Colombia

“…Aunque en el caso de los hospitales una medida de concentración tipo HHI hubiese sido preferida para medir la concentración del lado del vendedor, los datos disponibles solo corresponden al número de hospitales públicos por área de mercado. No obstante, como señalan Wong et al (2005), la inferencia relacionada con los efectos de la competencia no son sensibles a si el número de hospitales o un indicador HHI es utilizado para medir la intensidad de la competencia de los vendedores en la industria de servicios hospitalarios. Nota: 1).…”

Half Space

“…; Wong et al 2005). However, such proved highly arbitrary, given that regionalized configurations vary dramatically from one to the other.…”