Hospital market concentration and discrimination of patients

Posted by D. Daniel Sokol 

Ralf Dewenter (Dusseldorf Institute for Competition Economics), Thomas Jaschinski (Dusseldorf Institute for Competition Economics) and Bjorn A. Kuchinke (Technische Universitat Ilmenau) analyze Hospital market concentration and discrimination of patients.

ABSTRACT: In this paper we investigate the existence of a two-tier medical system in the German acute care hospital sector using data from a survey of 483 German hospitals. The focus of our analysis lies on the impact of hospital concentration on the probability of discrimination of patients with different health insurances in regard to the access to medical services. Accounting for a possible endogeneity of market structure, we find that hospitals in highly concentrated markets are less likely to pursue any differentiation among prospective patients with different health insurances. We ascribe this finding to competitive pressure in less concentrated markets. Hospitals in competitive markets are more obliged to steal business from rival hospitals by privileging profitable patients than hospitals in highly concentrated markets.