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Many recent studies have demonstrated that hospital utilization rates vary widely across small geographic areas. The variation is often attributed to the style of practice of the provider. This study demonstrates that hospital utilization varies widely between "micro" areas within individual hospital market areas. Further, the study demonstrates that hospital utilization rates within a hospital market area are more similar to each other than to rates in "micro" areas within other hospital market areas. After adjustment for available demographic, socioeconomic, and epidemiological factors, the utilization rates within "micro" areas are highly related to the group of hospitals that dominates the market area. After simultaneously adjusting for age and poverty, the market share-dominant group explains 35 percent of the variance in surgical use rates of "micro" areas and 39 percent of the variance in medical use rates.