Updated Variable-Radius Measures of Hospital Competition

Authors

  • Carole Roan Gresenz,

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    • Address correspondence to Carole Roan Gresenz, Ph.D., RAND, 1200 South Hayes Street, Arlington, VA 22202-5050. Dr. Gresenz is an Economist at RAND. Jeannette Rogowski, Ph.D., is a Senior Economist at RAND, Arlington, VA. José J. Escarce, M.D., Ph.D., is Professor of Medicine, David Geffen School of Medicine at UCLA, and a Senior Natural Scientist at RAND, Santa Monica, CA.

  • Jeannette Rogowski,

  • José J. Escarce


  • This study was supported by program project grant P01-HS10770 from the Agency for Healthcare Research and Quality.

Abstract

Objective. To calculate variable-radius measures of hospital market size and create measures of competition for hospitals' markets.

Data Sources. Discharge abstracts from the 1997 State Inpatient Databases of the Healthcare Cost and Utilization Project (HCUP) linked with the American Hospital Association (AHA) Annual Survey, Area Resource File (ARF), InterStudy Regional Market Analysis database, and Medicare's Prospective Payment System Impact Files.

Study Design. Hospital radii capturing 75 and 90 percent of hospital admissions regressed against hospital and health care market characteristics and other local area characteristics, where the specification was designed to maximize predictive ability. The number of competing hospitals and the Herfindahl-Hirschman index (HHI) of competition were calculated for each hospital's market.

Data Collection Methods. Discharge abstracts were used to create actual radii for hospitals in nine states. These data were linked with other data describing hospital, health care market, and other characteristics.

Principal Findings. We explained 44.7 and 9.6 percent of the variation among urban and rural hospitals, respectively, in radii that capture 90 percent of patients, and slightly less of the variation in radii that capture 75 percent of patients. Population density; number of other hospitals in the local area; and hospital characteristics such as medical school affiliation, percentage of admissions that are Medicaid, case mix, and service offerings are important correlates of a hospital's market size.

Conclusions. Predicted radii and associated competition measures were created (matched to AHA hospital identifiers) for all nonfederal, short-term, general medical/surgical hospitals in the continental United States for which complete data were available in 1997 (N=4,806) and are available from the authors.

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