Costs and Price Competition in California Hospitals, 1980-1990

Published In: Health Affairs, v. 13, no. 4, Fall 1994, p. 118-126

Posted on RAND.org on January 01, 1994

by Jack Zwanziger, Glenn Melnick, Anil Bamezai

Read More

Access further information on this document at content.healthaffairs.org

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

Concerns cost and price competition in California hospitals between 1980 and 1990. It explores California's experience with health maintenance and preferred provider organizations, which led to reductions in the growth of hospital costs. It also provides analyses to show that reductions of hospital costs were larger in competitive markets and that, if implemented on a national scale, selective contracting could be expected to reduce the growth of hospital costs even more rapidly than occurred in California. This article speaks of competition as a direct strategy for containing costs. However, it concludes that widespread consolidation of hospitals under the guise of increasing efficiency could undercut any possibility for competitive forces constraining providers' behaviors.

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 www.rand.org/about/principles.

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.