A variable-radius measure of local hospital market structure

Abstract

Objective: To provide a radius measure of the structure of local hospital markets that varies with hospital characteristics and is available for all hospitals in the United States.

Data sources: 1982 American Hospital Association (AHA) Survey of Hospitals, 1982 Area Resource File (ARF), and 1983 California Office of Statewide Health Planning and Development (OSHPD) discharge abstracts.

Study design: The OSHPD data were used to measure the radii necessary to capture 75 percent and 90 percent of each hospital's admissions. These radii were used as the dependent variables in regression models in which the independent variables were from the AHA and ARF. To estimate predicted market radii, the estimated parameters from the California models were applied to all nonfederal, short-term, general hospitals in the continental United States. These radii were used to define each hospital's service area, and all other hospitals within the calculated radii were considered potential competitors. Using this definition, we calculated two measures of local market structure: the number of other hospitals within the radius and a Herfindahl-Hirschman Index based on the distribution of hospital bed shares in the market.

Data extraction methods: These measures were calculated for all nonfederal, short-term, acute care hospitals in the continental United States for whom complete data were available (N = 4,884).

Conclusions: These measures are available from the authors on computer-readable diskette, matched to hospital identifiers.