Hospitals and Antitrust

Defining Markets, Setting Standards

Published In: Journal of Health Politics, Policy and Law, v. 19, no. 2, 1994, p. 423-447

Posted on on January 01, 1994

by Jack Zwanziger, Glenn Melnick, Kathleen Eyre

Read More

Access further information on this document at

This article was published outside of RAND. The full text of the article can be found at the link above.

Presents a methodology for defining markets and setting standards in the context of hospitals and antitrusts. The methodology is based on the premise that the creation of dominant hospital markets in an area undermines the ability of selective contracting to constrain hospital price increases. Antitrust enforcements must follow a fine line between allowing organizations to combine insurance, physician, and hospital components, and enabling them to create the organizational capacity required to control costs and provide high quality of care. Entities that dominate the market have little reason to try to achieve these objectives. The authors argue that ultimately the factor that determines market performance is the range of choices the population has among competing insurance/hospital/physician combinations. The article concludes that because it is very difficult to reverse mergers once they occur, particular attention should be paid to preventing one organization from dominating an individual area, especially if a policy of managed competition is to succeed in reducing hospital costs.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.