Health Economics, Policy and Law


Regionalization versus competition in complex cancer surgery

Vivian Ho a1c1, Robert J. Town a2 and Martin J. Heslin a3
a1 Baker Institute, Rice University and Department of Medicine, Baylor College of Medicine, USA
a2 School of Public Health, University of Minnesota, USA
a3 Department of Surgery, The University of Alabama at Birmingham, USA

Article author query
ho v   [Google Scholar] 
town rj   [Google Scholar] 
heslin mj   [Google Scholar] 


The empirical association between high hospital procedure volume and lower mortality rates has led to recommendations for the regionalization of complex surgical procedures. While regionalization may improve outcomes, it also reduces market competition, which has been found to lower prices and improve health care quality. This study estimates the potential net benefits of regionalizing the Whipple surgery for pancreatic cancer patients. We confirm that increased hospital volume and surgeon volume are associated with lower inpatient mortality rates. We then predict the price and outcome consequences of concentrating Whipple surgery at hospitals that perform at least two, four, and six procedures respectively per year. Our consumer surplus calculations suggest that regionalization can increase consumer surplus, but potential price increases extract over half of the value of reduced deaths from regionalization. We reach three conclusions. First, regionalization can increase consumer surplus, but the benefits may be substantially less than implied by examining only the outcome side of the equation. Second, modest changes in outcomes due to regionalization may lead to decreases in consumer surplus. Third, before any regionalization policy is implemented, a deep and precise understanding of the nature of both outcome/volume and price/competition relationships is needed.

c1 Corresponding author: Dr Vivian Ho, Baker Institute for Public Policy - MS 40, Rice University, 6100 Main Street, Houston, TX 77005, USA. Tel: +1 (713) 348-2195; Fax: +1 (713) 348-5278; Email: