An Empirical Analysis of the Effects of Mergers on Hospital Performance

Résumé du livre

This study examines the effect of mergers on hospital performance and identifies patterns in performance characteristics which are unique to hospitals that merge. Performance is defined by variables contributing either to operational outcome or operating structure and efficiency of a hospital. Hospital performance is also examined in the context of an integrated system, which includes the effect of the community in which the hospital derives its patient population. Finally, hospital merger behavior is compared to general firm merger behavior. For the purpose of this study, data for an eight year time period for 151 hospitals (33 experiencing mergers) in Missouri were collected and analyzed using logistic regression. It was found that hospitals with lower occupancy rates, higher average length of stays, and lower total revenue in proportion to total operating expenses were more likely to merge. In addition, these hospitals were located in areas with lower labor force participation rates, greater total population, and had higher hospital payroll expenses, along with higher overall hospital operating expenses. The impact of performance changes were seen in the first two years, but some performance goals were most likely to be achieved after three to four years. Hospital merger behavior was found to mirror general firm merger behavior through increasing structural efficiency, size, and market share.