Hospital Geographic Expansion: The New Medical Arms Race?

Health Affairs, Vol. 31, No. 4

The emphasis that hospitals place on cutting-edge technology and niche specialty services to attract physicians and patients has set the stage for health care’s most recent competitive trend: an increased level of targeted, geographic service expansion to “capture” well-insured patients. Researchers conducted interviews in twelve U.S. communities in 2010 and found that many hospital systems—some with facilities in geographically undesirable areas—have expanded to compete for better-insured patients by building or buying facilities and physician practices in nearby, more affluent communities. Along with extending services to new markets, these hospital outposts often serve to pull well-insured patients to flagship facilities. The acceleration and expansion of such geographically competitive strategies by hospitals has implications for cost and access. Although payers and competitors contend such strategies will lead to higher costs, hospitals assert the expansions will increase efficiency, increase access, and improve the quality of care provided to patients.

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