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Pre- and Post-Merger Investigation of Hospital Mergers

Author

Listed:
  • Ugur Tony Sinay

    (University of Scranton)

Abstract

In the late 1980s, the Prospective Payment System and the expansion of managed care plans forced hospitals to be cost efficient. The increased number of hospital mergers suggests that merging is a way to become more efficient to ensure long-run survival. This study presents an economic framework and empirical analysis to test the existence of multiproduct scope and scale economies among merged and control hospitals prior to the merger, and one year and two years after the merger, using the AHA data from 1987 to 1990. Results support the operational efficiency hypothesis as the reason for merger.

Suggested Citation

  • Ugur Tony Sinay, 1998. "Pre- and Post-Merger Investigation of Hospital Mergers," Eastern Economic Journal, Eastern Economic Association, vol. 24(1), pages 83-97, Winter.
    • Handle: RePEc:eej:eeconj:v:24:y:1998:i:1:p:83-97
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/eeconj/Volume24/V24N1P83_97.pdf
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    Citations

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    Cited by:

    1. Sinay, Tony, 2005. "Cost structure of osteopathic hospitals and their local counterparts in the USA: Are they any different?," Social Science & Medicine, Elsevier, vol. 60(8), pages 1805-1814, April.
    2. Teresa D. Harrison, 2007. "Consolidations and closures: an empirical analysis of exits from the hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 16(5), pages 457-474, May.
    3. G D Ferrier & V G Valdmanis, 2004. "Do mergers improve hospital productivity?," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(10), pages 1071-1080, October.
    4. Helda Azevedo & Céu Mateus, 2014. "Cost effects of hospital mergers in Portugal," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 999-1010, December.
    5. Alan Marco & Gordon Rausser, 2011. "Complementarities and spillovers in mergers: an empirical investigation using patent data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(3), pages 207-231.

    More about this item

    Keywords

    Hospital; Hospitals; Managed Care; Merger;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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