ABSTRACT
The greater the competition, the more responsive the demand for quality, because patients will evaluate a hospital based on its quality to obtain more benefits for the same price. An increase in competition can decrease quality as well. The source is the profit margin. If the profit margin is negative, the hospital will take a loss if increasing its quality. The profit margin may be low if one of these events occurs: The marginal cost proportion against the cost is high, Marginal cost increases and Service costs do not include investment/capital cost. There are some nonfinancial factors affecting the relationship between hospital competition and service quality. These factors include: Altruism of health providers, The release of quality information to patients, The role of drugstores, clinics, class C hospitals, community health centers, and other gatekeepers, "Cream skim" and "skimp"., Cost caging, Wait time, Competitive area, Market size, Market structure, Market dynamic and Specialization.
