Segmentation in local hospital markets

Med Care. 1993 Jan;31(1):52-64. doi: 10.1097/00005650-199301000-00004.


This study examines evidence of market segmentation on the basis of patients' insurance status, demographic characteristics, and medical condition in selected local markets in California in the years 1983 and 1989. Substantial differences exist in the probability patients may be admitted to particular hospitals based on insurance coverage, particularly Medicaid, and race. Segmentation based on insurance and race is related to hospital characteristics, but not the characteristics of the hospital's community. Medicaid patients are more likely to go to hospitals with lower costs and fewer service offerings. Privately insured patients go to hospitals offering more services, although cost concerns are increasing. Hispanic patients also go to low-cost hospitals, ceteris paribus. Results indicate little evidence of segmentation based on medical condition in either 1983 or 1989, suggesting that "centers of excellence" have yet to play an important role in patient choice of hospital. The authors found that distance matters, and that patients prefer nearby hospitals, moreso for some medical conditions than others, in ways consistent with economic theories of consumer choice.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • California
  • Catchment Area, Health / statistics & numerical data
  • Choice Behavior*
  • Continental Population Groups
  • Diagnosis-Related Groups / classification
  • Female
  • Health Care Costs
  • Health Services Accessibility / economics
  • Health Services Accessibility / standards*
  • Health Services Accessibility / statistics & numerical data
  • Health Services Research
  • Hospitals / classification*
  • Hospitals / statistics & numerical data
  • Humans
  • Insurance, Hospitalization / classification
  • Insurance, Hospitalization / statistics & numerical data
  • Male
  • Medicaid / statistics & numerical data
  • Medicare / statistics & numerical data
  • Models, Statistical
  • Patient Admission / statistics & numerical data*
  • Product Line Management / classification*
  • Product Line Management / statistics & numerical data
  • Regression Analysis
  • Travel
  • United States