Reconsideration of discharge data to measure competition in the hospital industry

Economists have long used state-collected discharge data to construct Hirsc hman-Herfindahl (HH) indices measuring hospital competition. Since data are collected to determine the facility providing the service rather than owne rship, the difference between the number of reporting facilities and the nu mber of competitors has grown over time due to mergers and networking activ ities. Consequently, the validity of the discharge HH methodology, as curre ntly employed, is in doubt. Comparing the annual census of New York state a cute-care hospitals by the State and the American Hospital Association (AHA ), we find that it is increasingly important to account for changes in owne rship when constructing such indices. Copyright (C) 2001 John Wiley & Sons, Ltd.