Antitrust Issues in Defining the Product Market for Hospital Services

Abstract

In this paper we examine the standard product market relied on by the courts and antitrust agencies in hospital mergers-acute care, inpatient services-and consider whether narrower or broader alternatives may be more appropriate to assess the competitive effects of a hospital merger. To examine how much disaggregation of the standard product market definition may matter for the definition of relevant geographic markets and concentration, we considered patient flows and concentration for the overall inpatient 'cluster' and more disaggregated categories of service for two regions of California: San Luis Obispo and Sacramento. We find that a disaggregated approach may involve a relatively small number of inpatient service categories, that the overall cluster masked some variability in the underlying patient flows by service category, and that in San Luis Obispo, the overall cluster masked considerable detail in concentration at the service category level, which appeared to have been much less true in Sacramento.Antitrust, Hospitals, Healthcare, Market Definition,

The Price Effects of Hospital Mergers: A Case Study of the Sutter–Summit Transaction

“…This entails delineation of both a product and a geographic market within which the competitive effect of a proposed merger is analyzed. 5 In cases involving hospital mergers, the courts generally support a product market of acute inpatient care Sacher and Silvia, 1998). For other services, such as outpatient surgery, hospitals are assumed to have relatively little market power, since they face significant competition from non-hospital sources.…”

The Competitive Effects of Not‐for‐Profit Hospital Mergers: A Case Study

“…Net price was then calculated using the same methodology as outlined for the 1986 to 1992 data. 18 For a critical overview of the`acute care inpatient' product market de¢nition used in hospital merger investigations, see Sacher and Silvia [1998].…”

Defining Hospital Markets An Application to the German Hospital Sector

“…For example, there is not only a category for General Medicine, but also one for General Medicine Cardiology, indicating that treatments within the latter group require not only knowledge in General Medicine, but further specialization in the field of Cardiology. Sacher and Silvia apply this approach on two regions in California and find that the cluster market approach masks considerable variation on service category level [29]. e As Varkevisser et al point out, the product dimension of the hospital market definition is usually much less contentious.…”