Hospital consolidation and costs: another look at the evidence.
We investigate whether pairwise hospital consolidation leads to cost savings. We use a unified empirical methodology to assess both systems and mergers. Our comparison group for each consolidation consists of 10 'pseudo-mergers' chosen based on propensity scores. Cost function estimates reveal that consolidation into systems does not generate savings, even after 4 years. Mergers in which hospitals consolidate financial reporting and licenses generate savings of approximately 14%: 2, 3, and 4 years after merger. The system consolidation and merger results are very robust to changes in the specification and the sample.
Dranove
David
D
Center for Health Industry Market Economics, Department of Management and Strategy, Kellogg School of Management, 2001 Sheridan Road, 616 Leverone Hall, Northwestern University, Evanston, IL 60208, USA.
Lindrooth
Richard
R
D017046:Cost Savings / Q000706:statistics & numerical data*; D003659:Decision Making, Organizational; D004465:Economic Competition; D017598:Efficiency, Organizational; D019981:Health Care Sector; D006273:Health Facility Merger / Q000191:economics*; D006302:Health Services Research; D017721:Hospital Costs / Q000706:statistics & numerical data / Q000639:trends*; D006761:Hospitals / Q000145:classification; D017059:Models, Econometric; D009096:Multi-Institutional Systems / Q000191:economics*; D014481:United States