The Effect of Local Hospital Networks on the Cost and Accessibility of Hospital Services

Do hospital networks enhance the market power of hospitals in ways that lead to higher prices? Do networks produce pro-competitive benefits in the form of new services? Researchers at Boston University's School of Public Health assessed the degree to which networks decrease competition for hospital services and the implications for their costs. The research focused on four questions: 1) What do local hospital networks look like in terms of attributes that are potentially relevant to their effect on the cost and accessibility of hospital services? 2) Do hospitals appear to use networks to enhance their market power for purposes of charging higher prices for their services? 3) Do hospital networks appear to produce pro-competitive benefits such as new services, that expand access to care? 4) Does the structure of hospital networks have implications for their effect on the cost of hospital services? These research questions related to the larger issue of whether antitrust laws should be relaxed in the case of hospital collaborative arrangements. The objective of the project was to inform policymakers about the appropriate level of scrutiny for hospital networks that may reduce competition for hospital services, as well as to assist antitrust enforcement officials and researchers about how to properly conceptualize and measure the degree of competitive rivalry within hospital markets.