Community Responses to National Healthcare Firms

Over the last 25 years, national Health Maintenance Organization (HMO) and hospital firms attempted to enter local markets, either by acquiring formerly independent, locally based HMOs and hospitals or by directly entering local markets. While national HMOs have been relatively successful, national hospital firms have had much less success. This paper explores the reasons for this difference. It reviews changes in presence of national HMO and hospital firms in markets, discusses common conceptual lenses through which national entry into local markets typically has been viewed, and shows how social network theory can be used to develop a better understanding of why the entry experience of national HMO and hospital firms varies across markets. The paper concludes with a research agenda that addresses issues raised by social network theory and its application to national firm entry into local markets.