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Hospital Competition, Managed Care, and Mortality after Hospitalization for Medical Conditions: Evidence from Three States

University of California, Los Angeles, and RAND Health

Arvind K. Jain

RAND Health

Jeannette Rogowski

University of Medicine and Dentistry of New Jersey and RAND Health

This study assessed the effect of hospital competition and HMO penetration on mortality after hospitalization for six medical conditions in California, New York, and Wisconsin. We used linked hospital-discharge and vital-statistics data to study adults hospitalized for myocardial infarction, hip fracture, stroke, gastrointestinal hemorrhage, congestive heart failure, or diabetes. We estimated logistic regression models with death within 30 days of admission as the dependent variable and hospital competition, HMO penetration, and hospital and patient characteristics as explanatory variables. Higher hospital competition was associated with lower mortality in California and New York but not Wisconsin. Higher HMO penetration was associated with lower mortality in California but higher mortality in New York. These findings suggest that hospitals in highly competitive markets compete on quality even in the absence of mature managed-care markets. The findings also underscore the need to consider geographic effects in studies of market structure and hospital quality.

Key Words: quality of care • competition • hospital markets • managed care

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