California Hospitals Compete By Lowering Costs

Concerns The California Experiment, in which, because of the emergence of managed care organizations, hospitals have been experiencing a great deal of competition. This article suggests that in a market such as California, where HMOs and PPOs have gained widespread acceptance and excess hospital capacity exists, competitive market conditions can be leveraged to negotiate lower prices with health care providers. This finding was confirmed in California. Data comparing California to the nation as a whole suggest that this finding is generalizable.