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.