Segmentation in local hospital markets

Area of Science:

• Health economics
• Healthcare market analysis
• Patient behavior studies

Background:

• Understanding patient choice is crucial for healthcare market dynamics.
• Previous research has explored factors influencing hospital selection.

Purpose of the Study:

• To examine market segmentation in California hospitals based on patient insurance, demographics, and medical conditions in 1983 and 1989.
• To identify how patient characteristics influence hospital choice and hospital characteristics.

Main Methods:

• Analysis of patient admission data in California local markets for 1983 and 1989.
• Statistical examination of the relationship between patient insurance status, race, medical condition, and hospital characteristics (cost, services).
• Inclusion of distance as a factor in patient hospital preference.

Main Results:

• Significant market segmentation observed based on insurance status (Medicaid, private) and race (Hispanic).
• Medicaid and Hispanic patients favored lower-cost hospitals with fewer services; privately insured patients preferred hospitals with more services.
• Little evidence of segmentation by medical condition; patient preference for nearby hospitals was significant and varied by condition.

Conclusions:

• Hospital markets in California showed clear segmentation by insurance and race, reflecting differing patient priorities and hospital offerings.
• Medical condition played a minor role in patient hospital choice, indicating limited impact of specialized centers.
• Geographic proximity is a key determinant of hospital choice, aligning with economic consumer choice theories.