Exercise #3:
The dataset provides Herfindahl–Hirschman Index and herfindahl index categories, use the herf_cat variable to answer the following questions:
Note: “The Herfindahl–Hirschman Index is a commonly accepted measure of market concentration used by antitrust enforcement agencies and scholars in the field. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers” (NASI, 2015; pp: 14-16).
Read more from here:
https://www.urban.org/sites/default/files/publication/50116/2000212-Addressing-Pricing-Power-in-Health-Care-Markets.pdf
For this exercise you do not need to compute the HHI, but if you have any questions, please do not hesitate to ask. However, try to learn more about this you will need that to report your findings.
Using the dataset from week 1 exercise, answer the following questions.
- Comparing the following information between hospitals located in high, moderate and low competitive markets below. (Table 3)
- What are the main significant differences between hospitals in different markets? (use Anova test)
- Using density curves or boxplots, compare hospital cost and revenues across the three markets.
- What is the impact of being in a high-competitive market on hospital revenues and cost? Do you think being in a high-competitive market has a positive impact on hospital net benefits? What about the number of Medicare and Medicaid discharges? Do you think hospitals in high-competitive market are more likely to accept more Medicare and Medicaid patients? What is the impact of other variables? Discuss your findings in 1-2 paragraphs.
Table 3. Comparing hospital characteristics and market, 2011 and 2012
High Competitive Market Moderate Competitive Market Low Competitive
Market ANOVA/Chi-Sq (results)
P value
Hospital Characteristics N Mean St. Dev N Mean St. Dev N Mean St. Dev
Hospital Beds
Number of paid Employees
Number of non-paid Employees
Interns and Residents
System Membership
Total Hospital Cost ($)
Total Hospital Revenues ($)
Hospital Net Benefit ($)
Available Medicare Days
Available Medicaid Days
Total Hospital Discharges
Total Medicare Discharges
Total Medicaid Discharges
- Herfindahl Index
Round mean and st.dev figures to nearest whole number (except Herfindahl index). Use 2 decimal places for p values.
