Contract management in USA hospitals: service duplication and access within local markets

This paper examines the extent to which hospitals that are under external contract management engage in service duplication, as well as the degree to which the various services they offer contribute to or detract from community access. The study incorporates all USA hospitals using data from the American Hospital Association Annual Survey Database, supplemented by county level measures obtained from the area resource file (ARF). Using data on the 3794 hospitals classified as acute care facilities in 2002, we performed a set of logistic regressions that analyzed whether a hospital offered each of 74 distinct services. For each service (regression), key independent variables measured the number of other hospitals in the local market area that also offered the service. Local area market definitions are the areas circumscribed by the hospital within distances of 10 and 20 miles. Results suggest that contract-managed (CM) hospitals display a more competitive pattern (service duplication) than hospitals in general, but CM hospitals that are the sole provider of services locally are less likely to offer services than traditionally managed sole hospital providers. Contract management does not appear to offer any particular advantages in improving access to hospital services.