Exclusive arrangements in the hospital industry

There have been numerous antitrust cases concerning exclusive hospitals privileges. The plaintiff often alleges both that he was foreclosed from the market and that an illegal tying agreement exists. This paper, which draws heavily from the cases, concludes both that the relevant market for hospital based physicians is national and that the impact on competition is minimal. The hospital frequently initiates the exclusive arrangement which suggests that efficiency is enhanced. Our analysis also shows that the tying claims are generally unpersuasive. However, exclusive arrangements on occasion may be a device to exclude competitors. Finally, economic criteria are developed to help determine the desirability of particular exclusive arrangements.