Appropriate measures of hospital market areas.

TLDR

Hospital market area measurement is essential for policymakers using market‑oriented strategies to control hospital prices, and can be defined from individual hospital or overall market perspectives using geopolitical boundaries, distance, or patient‑origin data. This article provides a framework for evaluating which definitions of hospital market areas are suitable for various types of analyses. The authors develop this framework and compare market area definitions using California hospital and patient discharge data. The comparison reveals differences among the various market area descriptions based on the California data.

Abstract

As public and private policymakers turn to market-oriented strategies to control hospital prices, it is necessary to understand the conceptual underpinnings of hospital market area measurement. This article provides a framework for evaluating which definitions of hospital market areas are suitable for various types of analyses. Hospital market areas can be defined from two perspectives: an individual hospital perspective and that of the overall market. From each perspective, empirical definitions can be based on geopolitical boundaries, distance between hospitals, and patient-origin data. In this article, market areas are compared based on various descriptions using data on California hospitals and patient discharge abstracts.