Exercise #3:

The dataset provides Herfindahl-Hirschman Index, and herfindahel index categories, please use the herf_cat variable and answer the following questions:

Note: "The Herfindahl-Hirschman Index is a commonly accepted measure of market concentration used by antitrust enforcement agencies and scholars in the field. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers" (NASI, 2015; pp: 14-16). read more from here:

https://www.urban.org/sites/default/files/publication/50116/2000212-Addressing-Pricing-Power-in-Health-Care-Markets.pdf

For this exercise you do not need to compute the HHI, but if you have any questions, please do not hesitate to ask me, but try to learn more about this you will need that to report your findings.

Use the dataset from week1 exercise and then answer the following questions:

1. Compare the following information between hospitals located in high, moderate and low competitive markets? (table 1)
2. What are the main significant differences between hospitals in different markets? (use Anova test)
3. Use the density curves and compare hospitals cost and revenues between three markets.
4. What is the impact of being in high-competitive market on hospital revenues and cost? Do you think being in high-competitive market has positive impact on net hospital benefits? What about the number of Medicare and Medicaid discharge? Do you think hospitals in higher completive market more likely to accept more Medicare and Medicaid patients? What are the impact of other variables? Please discuss your findings in 1-2 paragraphs.

(Note: to answer to the last question, please compute the ratio-Medicare-discharge and ratio-Medicaid-discharge first and then run 2 ttest) high vs. moderate and high vs. low competitive market), please support your findings with box-plot).

Table 3. Comparing hospital characteristics and market, 2011 and 2012

	High Competitive Market	Moderate Competitive Market	Low Competitive Market	ANOVA/Chi-Sq (results)
Hospital Characteristics	N	Mean	STD	N	Mean	STD	N	Mean	STD
Hospital beds
Number of paid Employee
Number of non-paid Employee
Internes and Residents
System Membership
Total hospital cost
Total hospital revenues
Hospital net benefit
Available Medicare days
Available Medicaid days
Total Hospital Discharge
Medicare discharge
Medicaid discharge
14. Herfindahel index