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Applying Antitrust Concepts to the Acute Care Hospital Industry: Defining the Relevant Market for Hospital Services

In considering the possible antitrust implications of a merger of two or more competing hospitals, the courts have generally found that hospitals provide a cluster of services which have significant peculiar characteristics that allow them to be considered a single product market. Spurred by changes in their environments, hospitals during the last decade have become markedly less homogeneous in their range of products and geographic markets. As a result, the impact of hospital mergers in the future may need to be assessed in multiple, more narrowly defined relevant markets, for which several possible definitional bases are suggested in this paper. The increased precision associated with such multidimensional antitrust analysis should permit a more effective consideration of the trade-offs between increases in hospitals' market power and advances in their relative operating efficiency and/or quality of services.