Gaynor M & Vogt W, (2000)

‘Antitrust and Competition in Health Care Markets’

in Culyer AJ and Newhouse JP (eds), Handbook of Health Economics, Amsterdam, North Holland.

• Reviews research issues in the economics of competition and antitrust in health care markets.
• Summarises the current literature and suggests methodological approaches for major research issues, focusing on hospital competition/mergers and on insurer monopsony.
• With respect to hospital competition, the key theoretical questions are (i) the definition of the ‘market’ and (ii) whether or not ownership status affects behaviour.
• Antitrust cases against hospital mergers often hinge on the definition of the relevant market. The two important dimensions of definition are product market and geographic market.
• The product market is usually taken to be “general acute care inpatient hospital services”, or similar.
• The authors outline a hypothetical ‘ideal’ method for measuring geographic hospital markets, which requires the researcher to know the full demand system for the hospitals.
• The authors conclude that although there has been a significant amount of research in health economics on the competitive workings of healthcare markets, this area is still in its infancy – as vigorous competition only emerged in health care markets relatively recently.