Dynamics of hospital competition: Social network analysis in the Italian National Health Service

Background: In the early 1990s, the governments of many countries took the first steps toward introducing market forces into the provision of health care services, with the aim of increasing hospital efficiency and quality of care. Several reforms have been developed to strengthen the role of competition, giving rise to forms of “managed competition.” As a result, the environment in which providers operate and perform is increasingly characterized by conditions of competition, rather than of cooperation. Purpose: The aim of this study was to analyze the evolution of competitive interdependences among hospitals and the impact of organizational demographics on pair-wise competition. Methodology: Longitudinal data on competitive interdependences collected within a regional community of hospital organizations in the Italian National Health Service were analyzed. Stochastic actor-based models designed for estimating network dynamics were used to study organizational characteristics influencing patterns of change in competitive interdependences. Findings: The results indicated that interorganizational cooperation is a significant predictor of competitive interdependences, that pair-wise competition among hospitals is primarily local, and that competitive interdependences are more likely to occur between local providers that differed with respect to performance and volume of activity. Practice implications: Exploring the evolution of competitive interdependences between hospitals is salient for administrators who are interested in increasing their understanding of the whole market. They can better identify direct competitors by paying particular attention to those organizational characteristics that likely predict competitive actions. This approach is also important for policy makers, which may be interested in better targeting hospital restructuring interventions while implementing procompetition reforms.