The limited relevance of patient migration data in market delineation for hospital merger cases

Abstract

A model is presented in which hospitals and patients exist at two points and in which a significant number of patients migrate from one point to the other because of perceived quality differences. Applying a market delineation test based on patient migration, such as the Elzinga-Hogarty test, this migration would lead to the conclusion that the relevant market for purposes of antitrust analysis includes both points. This conclusion is shown to be incorrect because a monopolist at the higher quality point generally would raise price significantly.