are consistently under pressure to control cost and improve quality. In addition to mounting payers’ demands, hospitals
operate under evolving market conditions that might threaten their survival. While hospitals
traditionally were concerned mainly with competition
from other hospitals
, today’s reimbursement schemes and entrepreneurial activities encouraged the proliferation of outpatient facilities such as ambulatory surgery centers
(ASCs) that can jeopardize hospitals
The purpose of this article was to examine the relationship between ASCs and general hospitals
. More specifically, we apply the niche overlap
theory to study the impact that competition
between ASCs and general hospitals
has on the survival chances of both of these organizational populations.
Our analysis examined interpopulation competition
in models of organizational mortality and market demand. We utilized Cox proportional hazard models to evaluate the impact of competition
from each on ASC and hospital exit while controlling for market factors. We relied on two data sets collected and developed by Florida’s Agency for Health Care Administration: outpatient facility licensure data and inpatient and outpatient surgical procedure data.
Although ASCs do tend to exit markets in which there are high levels of ASC competition
, we found no evidence to suggest that ASC exit rates are affected by hospital density. On the other hand, hospitals
not only tend to exit markets with high levels of hospital competition
but also experience high exit rates in markets with high ASC density.
The implications from our study differ for ASCs and hospitals
. When making decisions about market entry, ASCs should choose their markets according to the following: demand for outpatient surgery, number of physicians who would practice in the surgery center, and the number of surgery centers that already exist in the market. Hospitals
, on the other hand, should account for competition
from ASCs while making market-entry decisions and while developing their strategic plans.