Do Hospital Competition Measures Matter in Investigating the Quality Management Activities in Hospitals? Evidences from the Quality Indicator Adoption in Taiwan

Objective The purposes of this study were to examine the relationship between hospitals' neighbors with hospitals neighborhood effect and hospital's willingness to join quality indicator project. Methods A total of 238 hospitals registered in Taipei and Kao-Ping branch of the Bureau of National Health Insurance, were recruited in this study. The dependent variable is whether a hospital chooses to join the Taiwan Quality Indicator Project (TQIP) and Taiwan Healthcare Indicator Series (THIS). By employing geographic information system, we calculated distance-based and boundary-based competition indices (Herfindahl-Hirschman Index and hospital density). Hospital service volume was used as control variable. Logistic regression was used to compare the different definitions of neighbor effect. Results Because all control variables were highly correlated, the principle component analysis was used to avoid collinearity problem, and one factor was extracted as control variable in the baseline model, the pseudo R-square showed a fairly good fit. We further entered distance-based and boundary-based competition indices, respectively; the results showed great improvement at the distance-based Herfindahl-Hirschman Index at 5 KM.

Conclusions Herfindahl-Hirschman Index is an index of market competition. It implies that social processing of market information between social equivalents is a factor motivating hospital behaviors. However, the findings show that hospitals may react to their surrounding neighbors to whom they are not necessarily socially equivalent. The structural feature of market environment is also an important factor for understanding hospital behaviors.