Defining rural hospital markets.

OBJECTIVE. The purpose of this study is to examine the geographic scope of rural hospital markets. DATA SOURCES. The study uses 1988 Medicare patient discharge records (MedPAR) and hospital financial information (HCRIS) for all rural hospitals participating in the Medicare Program. STUDY DESIGN. Hospital-specific market areas are compared to county-based market areas using a series of geographic and socioeconomic-demographic dimensions as well as indicators of market competitiveness. The potential impact of alternative market configurations on health services research is explored by estimating a model of rural hospital closure. DATA COLLECTION/EXTRACTION METHODS. Hospital-specific market areas were defined using the zip code of patient origin. Zip code-level data were subsequently aggregated to the market level. FINDINGS. Using the county as the hospital market area results not only in the inclusion of areas from which the hospital does not draw patients but also in the exclusion of areas from which it does draw patients. The empirical estimation of a model of rural hospital closure shows that the definition of a hospital market area does not jeopardize the ability to identify major risk factors for closure. CONCLUSIONS. Market area definition may be key to identifying and monitoring populations at risk from rural hospital decisions to downsize or close their facilities. Further research into the market areas of rural hospitals that have closed would help to develop alternative, and perhaps more relevant, definitions of the population at risk.     

Updated variable-radius measures of hospital competition

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.     

Markets for hospital services in Zambia

Hospital reforms involving the introduction of measures to increase competition in hospital markets are being implemented in a range of low and middle-income countries. However, little is understood about the operation of hospital markets outside the USA and the UK. This paper assesses the degree of competition for hospital services in two hospital markets in Zambia (Copperbelt and Midlands), and the implications for prices, quality and efficiency. We found substantial differences among different hospital types in prices, costs and quality, suggesting that the hospital service market is a segmented market. The two markets differ significantly in their degree of competition, with the high cost inpatient services market in Copperbelt relatively more competitive than that in the Midlands market. The implications of these differences are discussed in terms of the potential for competition to improve hospital performance, the impact of market structure on equity of access, and how the government should address the problem of the mine hospitals.     

The effects of price competition and reduced subsidies for uncompensated care on hospital mortality

OBJECTIVE: To determine whether hospital mortality rates changed in New Jersey after implementation of a law that changed hospital payment from a regulated system based on hospital cost to price competition with reduced subsidies for uncompensated care and whether changes in mortality rates were affected by hospital market conditions. DATA SOURCES/STUDY SETTING: State discharge data for New Jersey and New York from 1990 to 1996. Study Design. We used an interrupted time series design to compare risk-adjusted in-hospital mortality rates between states over time. We compared the effect sizes in markets with different levels of health maintenance organization penetration and hospital market concentration and tested the sensitivity of our results to different approaches to defining hospital markets. DATA COLLECTION/EXTRACTION METHODS: The study sample included all patients under age 65 admitted to New Jersey or New York hospitals with stroke, hip fracture, pneumonia, pulmonary embolism, congestive heart failure, hip fracture, or acute myocardial infarction (AMI). PRINCIPAL FINDINGS: Mortality among patients in New Jersey improved less than in New York by 0.4 percentage points among the insured (p=.07) and 0.5 percentage points among the uninsured (p=.37). There was a relative increase in mortality for patients with AMI, congestive heart failure, and stroke, especially for uninsured patients with these conditions, but not for patients with the other four conditions we studied. Less competitive hospital markets were significantly associated with a relative decrease in mortality among insured patients. CONCLUSIONS: Market-based reforms may adversely affect mortality for some conditions but it appears the effects are not universal. Insured patients in less competitive markets fared better in the transition to price competition.     

Rural hospital ownership: medical service provision, market mix, and spillover effects

Objective. To test whether nonprofit, for‐profit, or government hospital ownership affects medical service provision in rural hospital markets, either directly or through the spillover effects of ownership mix. Data Sources/Study Setting. Data are from the American Hospital Association, U.S. Census, CMS Healthcare Cost Report Information System and Prospective Payment System Minimum Data File, and primary data collection for geographic coordinates. The sample includes all nonfederal, general medical, and surgical hospitals located outside of metropolitan statistical areas and within the continental United States from 1988 to 2005. Study Design. We estimate multivariate regression models to examine the effects of (1) hospital ownership and (2) hospital ownership mix within rural hospital markets on profitable versus unprofitable medical service offerings. Principal Findings. Rural nonprofit hospitals are more likely than for‐profit hospitals to offer unprofitable services, many of which are underprovided services. Nonprofits respond less than for‐profits to changes in service profitability. Nonprofits with more for‐profit competitors offer more profitable services and fewer unprofitable services than those with fewer for‐profit competitors. Conclusions. Rural hospital ownership affects medical service provision at the hospital and market levels. Nonprofit hospital regulation should reflect both the direct and spillover effects of ownership.     

Straight talk new approaches in healthcare. The outpatient market: protect important market share

Hospitals are facing competition from myriad freestanding players in the outpatient market. It's a fight hospitals can't afford to lose because they often use outpatient profits to cover losses in other service lines. Indeed about 60% of the average hospital's operating margin depends on outpatient revenues. In this session of Straight Talk, we examine how hospitals can build and finance outpatient services with physicians, increasing their competitiveness in increasingly competitive markets.     

Could U.S. hospitals go the way of U.S. airlines?

The market for hospital services, like global markets in general, is becoming more competitive. Increased price transparency and focused competition can squeeze out inefficiencies, restraining prices and making some consumers better off. But competition can have a dark side. U.S. hospitals can treat Medicare and Medicaid patients at less than cost, care for the uninsured, and provide other money-losing services because they can cross-subsidize. By 2025 the need for general hospitals to cross-subsidize will greatly in-crease, but their ability to do so will be diminished. U.S. hospitals could begin to resemble U.S. airlines: severely cutting costs, eliminating services, and suffering financial instability.     

Hospital ownership and medical services: Market mix, spillover effects, and nonprofit objectives

Hospitals operate in markets with varied demographic, competitive, and ownership characteristics, yet research on ownership tends to examine hospitals in isolation. Here we examine three hospital ownership types – nonprofit, for-profit, and government – and their spillover effects. We estimate the effects of for-profit market share in two ways, on the provision of medical services and on operating margins at the three types of hospitals. We find that nonprofit hospitals’ medical service provision systematically varies by market mix. We find no significant effect of market mix on the operating margins of nonprofit hospitals, but find that for-profit hospitals have higher margins in markets with more for-profits. These results fit best with theories in which hospitals maximize their own output.     

Measuring economies of scale at the city market level

Data envelopment analysis (DEA) techniques have been applied to the assessing efficiency and productivity among individual hospitals. In this article, we employ DEA to address whether economies of scale exist among hospital markets by first assessing individual hospitals operating in 2005 in the State of Florida and then by comparing hospital markets' efficiency relative to each other. The interest in hospital markets stems from issues relating to mergers among hospitals or the reallocation of services (inputs) among hospitals in a market area, particularly as occupancy rates and reimbursements are tending to fall. Facing more competition and stringent financial conditions, hospitals would benefit from decreasing costs by exploiting economies of scale.     

Determinants of hospital closure in South Korea: use of a hierarchical generalized linear model

Understanding causes of hospital closure is important if hospitals are to survive and continue to fulfill their missions as the center for health care in their neighborhoods. Knowing which hospitals are most susceptible to closure can be of great use for hospital administrators and others interested in hospital performance. Although prior studies have identified a range of factors associated with increased risk of hospital closure, most are US-based and do not directly relate to health care systems in other countries. We examined determinants of hospital closure in a nationally representative sample: 805 hospitals established in South Korea before 1996 were examined-hospitals established in 1996 or after were excluded. Major organizational changes (survival vs. closure) were followed for all South Korean hospitals from 1996 through 2002. With the use of a hierarchical generalized linear model, a frailty model was used to control correlation among repeated measurements for risk factors for hospital closure. Results showed that ownership and hospital size were significantly associated with hospital closure. Urban hospitals were less likely to close than rural hospitals. However, the urban location of a hospital was not associated with hospital closure after adjustment for the proportion of elderly. Two measures for hospital competition (competitive beds and 1-Hirshman--Herfindalh index) were positively associated with risk of hospital closure before and after adjustment for confounders. In addition, annual 10% change in competitive beds was significantly predictive of hospital closure. In conclusion, yearly trends in hospital competition as well as the level of hospital competition each year affected hospital survival. Future studies need to examine the contribution of internal factors such as management strategies and financial status to hospital closure in South Korea.     

杭州地区医疗市场结构与医院效率相关性分析

目的　了解杭州市所属 7个市 (县、区 )中心城镇医院的效率和医疗市场状况 ,为医疗市场化的推行提供理论依据。方法　对杭州市 37家医院 ,在确定医疗市场范围的基础上 ,计算各地医疗市场的HHI值。采用DEA方法测量各医院的平均效率 ,并进行平均效率与HHI值的相关性分析。结果　杭州市所属各市 (县 )的中心城镇医疗市场 ,HHI值均大于 180 0 ,属于垄断性竞争市场。 37家医院中 ,相对效率达 10 0 %的医院共 11家 ,小于 6 0 %的 11家。医疗市场的垄断性越高 ,其医院的平均效率越低。结论　建立低市场集中度的竞争市场是提高整体医院效率的有效途径。     

Competition among hospitals.

The traditional view of hospital competition has posited that hospitals compete primarily along 'quality' dimensions, in the form of fancy equipment to attract admitting physicians and pleasant surroundings to entice patients. Price competition among hospitals is thought to be non-existent. This paper estimates the effects of various hospital market characteristics on hospital prices and expenses in an attempt to determine the form of hospital competition. The results suggest that both price and quality competition are greater in markets that are less concentrated, although the net effect of the two on prices is insignificant. It appears, therefore, that, despite important distortions, hospital markets are not immune to standard competitive forces.     

Access implications of rural hospital closures and conversions

This article examines the effects of rural hospital closures and conversions on various structural dimensions of access. Based on a data set of rural hospitals in Texas during the period 1985-1990, the results indicate that closure or conversion typically had relatively little detrimental effect on hospital services and distance to alternative sources of care, but hospital bed and physician availability may have been adversely affected in certain cases. Rural hospital conversions to alternative types of health care facilities, such as ambulatory care clinics, do appear to have maintained the availability of a restricted set of medical services in some rural areas.     

Is There a Role for the Small Rural Hospital?*

Rural hospitals represent almost half of all short-stay nonfederal general hospitals in the United States, but have been more severely affected than their urban counterparts by changes in reimbursement, regulation, and technology. Two hundred and six rural community hospitals closed during the first nine years of the 1980s, and the rate of closure is accelerating. Using secondary data sources to examine the structure, role, and content of rural hospitals, small rural hospitals are described and compared to larger and nonrural hospitals. Rural hospitals differ systematically from other hospitals in the United States, with smaller daily censuses, lower occupation rates, shorter lengths of stay, and disproportionately high shares of Medicare patients. They are dominated by very small institutions, with more than 1,000 rural hospitals having fewer than 50 beds. Small rural hospitals offer a core of basic services to the populations they serve. Emergency, obstetric, and newborn services are virtually ubiquitous in rural hospitals of all sizes, and they are also more likely to offer long-term nursing and home care services than urban hospitals of similar size. The inpatient diagnostic and procedural mix of these institutions demonstrates that they provide care for common medical and surgical conditions of low complexity. Rural hospitals are also relatively inexpensive, representing only 6 percent of total expenditures for hospital care. Given their central role in supporting the provision of health services to rural areas, the apparent appropriateness of the conditions they treat, and their relatively modest cost, it would seem reasonable to use federal policy to stabilize our previous investment in these institutions.     

Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality

Public reporting on the quality of care is intended to guide patients to the provider with the highest quality and to stimulate a fair competition on quality. We apply a difference-in-differences design to test whether hospital quality has improved more in markets that are more competitive after the first public release of performance data in Germany in 2008. Panel data from 947 hospitals from 2006 to 2010 are used. Due to the high complexity of the treatment of stroke patients, we approximate general hospital quality by the 30-day risk-adjusted mortality rate for stroke treatment. Market structure is measured (comparatively) by the Herfindahl–Hirschman index (HHI) and by the number of hospitals in the relevant market. Predicted market shares based on exogenous variables only are used to compute the HHI to allow a causal interpretation of the reform effect. A homogenous positive effect of competition on quality of care is found. This effect is mainly driven by the response of non-profit hospitals that have a narrow range of services and private for-profit hospitals with a medium range of services. The results highlight the relevance of outcome transparency to enhance hospital quality competition.

     

A relational approach to measuring competition among hospitals

OBJECTIVE: To present a new, relational approach to measuring competition in hospital markers and to compare this relational approach with alternative methods of measuring competition. DATA SOURCES: The California Office of Statewide Health Planning and Development patient discharge abstracts and financial disclosure files for 1991. STUDY DESIGN: Patient discharge abstracts for an entire year were used to derive patient flows, which were combined to calculate the extent of overlap in patient pools for each pair of hospitals. This produces a cross-sectional measure of market competition among hospitals. PRINCIPAL FINDINGS: The relational approach produces measures of competition between each and every pair of hospitals in the study sample, allowing us to examine a much more "local" as well as dyadic effect of competition. Preliminary analyses show the following: (1) Hospital markets are smaller than thought. (2) For-profit hospitals received considerably more competition from their neighbors than either nonprofit or government hospitals. (3) The size of a hospital does not matter in the amount of competition received, but the larger hospitals generated significantly more competition than smaller ones. Comparisons of this method to the other methods show considerable differences in identifying competitors, indicating that these methods are not as comparable as previously thought. CONCLUSION: The relational approach measures competition in a more detailed way and allows researchers to conduct more fine-grained analyses of market competition. This approach allows one to model market structure in a manner that goes far beyond the traditional categories of monopoly oligopoly, and perfect competition. It also opens up an entirely new range of analytic possibilities in examining the effect of competition on hospital perfomance, price of medical care, changes in the market, technology acquisition, and many other phenomena in the health care field.     

医疗资源合理配置与医疗市场有序竞争

通过对 1995年底武汉地区拥有的医疗资源配置状况和 3所大型综合医院医疗工作量的分析,探讨了医疗市场与医疗资源配置的关系、医疗市场有序竞争对医疗资源发挥作用的影响、医疗资源的合理配置对医疗市场有序竞争的反作用。同时将武汉地区 1995年医疗资源配置情况与美国、英国、日本等发达国家作对比。     

America''s Rural Hospitals: A Selective Review of 1980s Research

We review 1980s research on American rural hospitals within the context of a decade of increasing restrictiveness in the reimbursement and operating environments. Areas addressed include rural hospital definitions, organizational and financial performance, and strategic management activities. The latter category consists of hospital closure, diversification and vertical integration, swing-bed conversion, sole community provider designation, horizontal integration and multihospital system affiliation, marketing, and patient retention. The review suggests several research needs, including: developing more meaningful definitions of rural hospitals, engaging in methodologically sound work on the effects of innovative programs and strategic management activities--including conversion of the facility itself--on rural hospital performance, and completing studies of the effects of rural hospital closure or conversion on the health of the communities served.     

How Does Degree of Rurality Impact the Provision of Surgical Services at Rural Hospitals?

ABSTRACT:  Context: Rural residents frequently have decreased access to surgical services. Consequences of this situation include increased travel time and financial costs for patients. There are also economic implications for hospitals as they may lose revenue when patients leave the area in order to obtain surgical services. Rural communities vary in size and distance from more populated centers. Since rural hospitals are located in varying types of rural communities, they likely differ with regard to the provision of surgical care. Purpose: To describe the differences between hospitals located in smaller versus larger rural areas regarding the provision of surgical care. Methods: A 12-item survey instrument based on one previously used in a pilot study was mailed to a national random sample of rural hospital administrators (n = 233). Rural location was determined using rural-urban commuting area codes. Findings: One hundred and eleven surveys were received, yielding a 48% response rate. Hospitals in larger rural areas had an average of 9 surgeons compared to 1 at hospitals in smaller rural areas. More administrators at hospitals located in larger rural areas viewed the ability to provide surgical care as very important to the financial viability of their hospital. Conclusions: Among rural hospitals located in communities of varying sizes there are significant differences in how surgical services are delivered and the financial importance of providing surgical care. Administrators at hospitals located in larger rural areas, more than in smaller ones, report financial reliance on their ability to offer surgical care and have significantly more resources available to do so.     

Diversification in the hospital industry

An institution life cycle hypothesis is advanced to explain hospital behavior: boom and bust, diversification and divestiture, occasionally leading to closure or merger. Hospital diversification and its impact on the operating ratio are studied for 172 hospitals during the period 2002-2007. Diversification and operating ratio are modeled in a two-stage least squares (TSLS) framework as being jointly dependant. Institutional diversification is found to yield better financial position, and the better operating profits allow the institution the wherewithal to diversify. The impact of external government planning and hospital competition is also measured. Some services are in a growth phase, like bariatric weight loss surgery and sleep disorder clinics. Management's attitude concerning risk and reward is considered.