The Effects of Hospital Competition and the Medicare PPS Program on Hospital Cost Behavior in California

by Jack Zwanziger, Glenn Melnick


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Previous studies of hospital competition have found that greater competition leads to higher hospital costs. In this Note, the authors report how the behavior of California's hospitals has changed since the introduction of programs intended to contain the rate of increase of hospital costs. Using data that cover the period preceding and following the introduction of these programs, they found that hospitals in more competitive markets have lowered their costs significantly.

This report is part of the RAND Corporation Note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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