The role of specialized clinical services in competition among hospitals

Because duplication of services among hospitals can be costly, it is important to understand the circumstances under which duplication occurs among hospitals within a region. In this sample of 3,584 community hospitals surveyed in 1972, we analyzed the impact of competition on the availability of specialized clinical services, with special focus on mammography, emergency services, cobalt therapy, heart surgery, and cardiac catheterization. We found that the presence of nearby institutions and services increases the availability of most of these services in neighboring hospitals. This supports the hypothesis that competition among hospitals within an open-ended reimbursement environment takes the form of nonprice competition for community-based physicians through the acquisition of expensive clinical facilities.