The relationship among cost, quality, and competition: an analysis of obstetrics services in Missouri hospitals.

An understanding of the relationship among cost, quality, and competition is vital to ongoing efforts of market-based health care reform. The objectives of this study were to introduce a distance-based operational definition of competition and to examine the relationships among competition, cost, and quality within the singular product and geographic market of obstetrics services at hospitals within the state of Missouri. Correlational results indicate that increased competition is related to both increases in quality of care and costs--the characteristics of a price-insensitive market. This has obvious implications on health policy debates focusing on enhancing market competition as an avenue for health care reform.