COMPETITIVE POTENTIAL OF HOSPITALS AND THEIR NEIGHBORS

Harold S. Luft and Susan C. Maerki

Contemporary Economic Policy, 1984, vol. 3, issue 2, 89-102

Abstract: Despite many proposals to encourage health‐care competition, some underlying assumptions about providers—both physicians and hospitals—have not been examined. This paper attempts to measure the potential for hospital competition by asking a very simple question: What proportion of United States hospitals have neighboring hospitals within reasonable commuting distance? Distances between short‐term general hospitals can be calculated by using geographic coordinates for their addresses. According to data from 48 states and 6,520 hospitals, 47 percent of hospitals have no neighbors within 5 miles, and 77 percent have fewer than five neighbors within 5 miles. At a 15‐mile radius, the numbers drop to 23 percent and 62 percent, respectively. These results imply that the potential for competitive hospital markets might not exist in large portions of the country. National strategies are likely to be most effective in the few dense hospital markets located primarily in the Northeast and Pacific states.

Date: 1984
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