HOSPITAL MARKETS AND COMPETITION - IMPLICATIONS FOR ANTITRUST POLICY

Antitrust and competitive issues are intertwined with efforts to contr ol health care costs. Whether hospital competition holds down costs is an issue o much controversy and is the topic of this article. The fin dings are consistent with the hypothesis that hospitals compete primar ily on a nonprice basis. This suggests that a more flexible applicatio n Of antitrust policy to hospital mergers will reduce cost increases a nd will improve efficiency. A step in this direction may be necessary if the managed care plans discussed by the Clinton administration crea te highly concentrated provider networks.