Competitive contingencies in selective contracting for hospital services.

Nelson Shelton, M.B.A. is a Ph.D. Candidate, Business and Public Policy Program, School of Business Administration, University of California, Berkeley. For about a decade, competition has been widely viewed as the most promising vehicle of cost containment in medical care. Although the procompetitive approach to cost containment has encompassed a number of different concepts of competition, the expectation common to all of these concepts has been that price consciousness on the demand side of medical insurance markets would create incentives, either