Determining a hospital's trading area: an application of Reilly's law.

This paper reports the results of a study examining hospital trading areas. The research involved an application of the "Law of Retail Gravitation" (Reilly 1929) for three hospitals in an urban area of Ohio. First, the paper reviews Reilly's Law, then various refinements of the original concept are noted. The "Law" is tested by identifying the actual trading areas of the three hospitals and comparing each of these to the areas predicted by Reilly's Law. While this theory is very logical and offers considerable insight into economic location analysis, characteristics of the hospital marketplace confounded its ability to accurately and consistently predict hospital trading areas in the present study.