Price Competition Among Oligopoly Of Hospitals And Division Of Medical Market

Due to particularity of medical market and price control of medical service, our government's control on hospitals doesn't genuinely change their positions of main body in market, which has led to a comparatively special competition pattern under such hospital structure systems at present. On one hand, although there exist relatively fierce competitions among the hospitals of different ranks in the same region, in essence , this kind of competitions is actually asymmetrically oligopoly competitions. By constructing a model of asymmetrical duopoly pricing game, this article has analyzed such case. The hospitals of different ranks enjoy relative monopoly positions for patients with different preferences, so based on patients' preferences, the competition equilibrium results in market divisions among the hospitals of different ranks and in excluding patients with low preferences out of medical service. Furthermore, with the improvement of social preferences for overall medical quality as well as the rise of equilibrium prices, the medical environments of those patients whose preferences gain no obvious improvements will instead deteriorate. On the other hand, because there exist horizontal differences in patients' preferences for the hospitals lying in different regions, the hospitals of the same rank in different regions will also bring about medical market division. By constructing a model of symmetrical duopoly pricing game, this article has analyzed such case. Under the equilibrium condition, patients will go to the hospitals where they think convenient and nearest, as a result, those who live in distant and inconvenient places will be excluded out of medical service. So we have concluded that our country's present medical structure system can't provide general service for such special commodities as medical service .By introducing social medical insurance systems into our models, we have found that with the perfection of social medical insurance systems, the rise of the medical service price in the equilibrium will worsen those who don't enjoy medical insurance, and especially the medical environments of patients with low preferences. The proportion of patients who don't enjoy medical insurance and are excluded out of medical market will be on the increase, which will intensify the conflict between present medical market structure and its goal of providing general service for medical industry. So responsible departments of the government should not only relax limitations of institutions regarding the private capital entering the large-and-middle-scale general hospitals and introduce competition mechanisms in medical markets but also set up the real welfare hospitals to provide the basic diagnosis and treatment services for patients with low preferences from the perspective of providing general medical service..