Hospital mergers and savings for consumers: exploring new evidence

Abstract

This study analyzes changes in costs and prices from 1989 to 1997 for 1,767 short-term hospitals, including 204 hospitals involved in mergers; 653 hospitals that were rivals to these merging hospitals; and 910 nonmerging nonrival hospitals. We find that merging hospitals generally had lower growth in costs and prices compared with their rivals and also with nonmerging nonrival hospitals. We find that the presence and extent of these savings varied based on market and hospital conditions. However, our findings suggest that cost and price savings resulting from mergers may be smaller than estimated in earlier studies, especially through our comparison of merging hospitals with their rivals.