The behavior of multihospital chains in increasingly competitive California hospital markets: pro- or...

In previous literature, no evidence of competitive advantage has been found from hospital affiliation with chains. In this paper, the role of chains in hospital adaptation to a more competitive environment is examined further. Two dimensions of hospital behavior are examined: the propensity to engage in contractual arrangements with insurers, and the effect of a changed competitive environment on preferred acquisition targets by chains. We find evidence that chains behave pro-competitively in the short run, and discuss policy implications of the observed market restructuring in the longer run.