The United States healthcare economy continues to be a lightning rod for social and political reform with spiraling costs exceeding the capabilities of customers and insurers alike. Recent literature and legislation suggests that diminishing competition within the industry may be a factor in price escalation. This econometric analysis focuses on the assumption of a competitive marketplace which should exhibit conventional price behavior characteristics in variable environments of supply and demand. However, the data does not exhibit the model of either a purely competitive nor a monopolistic economy. With several possible shortcomings evident in the proposed model for analyzing hospital competition, this paper also suggests elements within the marketplace that alter its competitive chemistry into a payer-driven non-monopsony.
