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JOURNAL ARTICLE
Is Hospital Competition Wasteful?
David Dranove, Mark Shanley and Carol Simon
The RAND Journal of Economics
Vol. 23, No. 2 (Summer, 1992), pp. 247-262
Published by: Wiley on behalf of RAND Corporation
DOI: 10.2307/2555987
https://www.jstor.org/stable/2555987
Page Count: 16
Recent attention has been given to the hypothesis that local hospital competition takes the form of costly duplication of specialized services—the "medical arms race." This contrasts with the hypothesis that the supply of specialized services is determined solely by "the extent of the market." We develop a model predicting the provision of specialized services in local markets. Our analysis of California hospitals provides minimal support for the medical arms race hypothesis while suggesting substantial scale economies for many services. Our results emphasize the importance of properly specifying the extent of the market. Failure to do so leads one to overestimate the importance of competition.
第一段:It is frequently argued that excessive competition among hospitals is wasteful.过度竞争会导致每个医院花很多钱吸引physicians因为好的physicians会吸引很多病人。也会花很多钱竞争提高health services。这样好像是会增加customer看病的成本.这个现象是“medical arms race”(MAR)。
1. Introduction
■ It is frequently asserted that consumers do not benefit from competition among hospitals. Hospital competition is allegedly wasteful, leading to higher costs without commensurate benefits. This wasteful competition is colloquially referred to as the "medical arms race" (henceforth, MAR). According to the MAR hypothesis, hospitals compete by providing too many high-tech medical services. Duplication of capital-intensive services raises the costs of care. At the same time, unnecessary duplication of services may cause the quality of care to fall as providers fail to take advantage of scale and learning effects.
第二段说MAR导致nationally raise health services啥的
然后这个影响了health industry本身根据市场调节价格或服务啥的这个规律。这边举了一个例子,说一个地方只有三所医院,其他两所医院要merged,按照正常市场(没有excessive competition)的情况,医院比较少的话,应该是供给大于需求,供给方在市场占优势。但是现在过度的竞争,MAR改变了这个情况。
A direct implication of the MAR hypothesis is that competition among hospitals is bad. This argument is of more than academic import. It has been embraced by the media, has motivated recent calls to nationalize the provision of hospital services, and has played a prominent role in recent hospital antitrust decisions. For example, the MAR hypothesis was a key factor in the Fourth Circuit's decision to permit a merger between the two largest hospitals in Roanoke, Virginia (a three-hospital town). In his decision, the district court judge wrote, "As a general rule, hospital rates are lower, the fewer the number of hospitals in an area" (United States v. Carilion Health System, 892 F 2d 1042). Similar arguments emerged in an Augusta, Georgia, merger case (FTC v. University Health Inc. and Health Care Corporation of Sisters of St. Joseph, No. CV 191-052).' While the MAR hypothesis is commonly accepted in the health industry, it completely reverses traditional economic thinking about the salutory effects of competition.
第2段说的government说如果一个市区要是把3家医院的两家合并了,rate也很低,然后这个现象体现了两个controversial assumptions:一个是什么external market supply, 还有一个忘记了。
This article reexamines the empirical evidence for the MAR. We contrast the MAR against the simple economic proposition that the number of providers of a particular high-tech service will be determined by the extent of the market. We ask two basic questions: First, controlling for the extent of the market, does the MAR matter on the margin? Second, is the magnitude of the MAR sufficient to warrant policy interest?
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