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Assessing the Impact of Hospital Mergers
To what extent do hospital mergers and consolidations help reduce excess capacity and contain costs? What factors and barriers explain these effects? The researchers examined the St. Louis hospital market, which has experienced "extensive merger activity in recent years," as well as the Philadelphia hospital market which has experienced less merger activity, to assess whether horizontal integration combined with purchaser pressure can shrink the excess capacity in a hospital system. They explored whether this occurs in a way that leads to more efficient utilization of hospital staff, equipment, and facilities. In particular, they: 1) developed and defined stages of evolution that hospitals and hospital networks experience after becoming integrated through mergers, acquisitions, or network affiliations; 2) determined the extent to which horizontal integration among hospitals has led to reduced excess capacity, more efficient utilization of plant and equipment, a more streamlined workforce, and lower costs in the St. Louis market; and 3) developed a set of indicators that measure the impact of horizontal hospital integration and determine the stage of a network's evolution that could be applied to other communities and establish a baseline for St. Louis. The objective of this study was to provide policymakers with information about whether hospital mergers lead to measurable outcomes related to efficiency, particularly in the areas of resource supply, utilization, and cost.
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