A Tale of Two Cities: Hospital Mergers in St. Louis and Philadelphia Not Reducing Excess Capacity

Vol. II, No. 2
April 1, 1998

Proponents of hospital mergers in local markets claim that mergers will have many desirable results—among them, reducing excess capacity and improving efficiency, thereby lowering costs. But a recent study of the early effects of hospital mergers in St. Louis and Philadelphia by researchers at the Economic and Social Research Institute (ESRI) in Washington, D.C., suggests that policymakers should not rely on mergers to reduce excess capacity and produce efficiency in the short term.