Consumer Information and Market-area Competition for Health-care Services

Abstract

This paper analyses the spatial availability of information and its impact on spatial-economic interactions, as measured by export sales and consumer trips to competing regional centres. The spatial interactions are applied to Medicare hospital services and patient mobility among market areas. A monopolistically competitive structure is developed within a competing central-place, spatial-interaction framework. Model estimates based on national data examine the determinants of Medicare health-care exports from the supply centres of Seattle and Portland to markets throughout the Pacific-Northwest states of Alaska, Idaho, Oregon, Montana and Washington. Entropy measures of the uncertainty of specialised medical information in contested areas show that more certain information in origin supply centres relative to destination demand nodes has a positive effect on the attraction of patients and on the receipt of Medicare revenue. Distance to origin supply centres has a strong negative effect on export sales and on patient travel from other areas. Hospital shares of revenue in the local supply centre have a significant positive effect on export sales of hospital Medicare services.