Variations in Rural Hospital Costs: Effects of Market Concentration and Location

This article explores two neglected questions: (1) Does the relationship between hospital concentration and costs vary between urban and rural markets? and (2) Do hospital costs in non-metropolitan areas vary with rurality? Covariance model results using 1992 data reveal that: (1) Although metropolitan and urban markets exhibit a negative relationship between hospital average costs and market concentration, non-metropolitan and rural markets fail to exhibit any relationship between costs and concentration; and (2) among non-metropolitan hospitals, only hospitals located in single-hospital communities have lower costs than their counterparts in multiple-hospital communities, once other factors are held constant.