Defining competition in markets: why and how?

OBJECTIVE

To examine the variety of perspectives from which to study the measurement of competition in the healthcare marketplace. Based on a meeting held by The Robert Wood Johnson Foundation in 1996, the authors discuss the complications inherent in the way markets and products are defined by key stakeholders, including economists, policymakers, federal antitrust officials, purchasers, and the competitors themselves.

CONCLUSION

The consensus among those who study this issue is that the way competitors, markets, and geographic areas are currently defined, and the ways of measuring competition, are inadequate, due mainly to the fact that both the measures and the definitions have been constructed from very limited data. Confounding this is the fact that analyses of competition are undertaken for such a wide variety of uses and that creating one database to solve the problems mentioned can be extremely daunting.

RECOMMENDATIONS

Future research should examine ways to develop better definitions of the new healthcare structures that are competing with each other and ways to create measures of competition that include these new structures. To remedy gaps in the ability to measure competition, the field might also benefit from a public use data file, similar to the Area Resource File (ARF), that would contain HMO data according to geographic area, as well as provider data, employer data, payer data, and sociodemographic data.