Hospital markets with regulated prices and different ownership types were studied using a Hotelling framework. The research found that if a public hospital is similar to or less efficient than a private hospital, privatizing it can increase overall welfare. This is because regulated prices can lead to under- or over-provision of quality. However, if the public hospital is more efficient and competition is strong, a mixed duopoly with both public and private hospitals can outperform either type alone. This is due to a medium price that discourages overprovision of quality by the less efficient hospital and encourages quality improvement in the more efficient public hospital.