Antitrust Policy and Hospital Mergers: Recommendations for a New Approach

There are well-known problems inherent in using patient flows to define geographic markets when considering hospital mergers. Generally, there is no theoretical link between patient flows and the presence or absence of market power. But the courts have not always found these doubts persuasive. More to the point, the court decisions of the last decade indicate a lack of sympathy with the doubters, presuming instead that significant patient flows preclude the presence of market power. It is this presumption - heretofore untested on any data - that this article questions. The basis for this critique is simple in principle: patient flow data do not come close to approximating generally accepted criteria for determining market boundaries.