Multihospital chain acquisitions and competition in local health care markets

This paper examines the determinants of multi-hospital acquisitions in California during a period of increased competition, 1984-1993. Evidence is examined for differences by chain type in acquisition preferences in the face of increased competitive pressure. Significant differences are found among chain types (for-profit, non-profit, and church). All three types appear to position themselves through acquisitions to obtain multiple-hospital holdings within local markets, with the non-profit type exhibiting the greatest tendency. Such positioning may enhance efficiency in payor contracting and increase market power, lowering competition in the long run.