Can Governments Do it Better? Merger Mania and Hospital Outcomes in the English NHS
Martin S. Gaynor
Carnegie Mellon University; National Bureau of Economic Research (NBER); Leverhulme Centre for Market and Public Organisation
Imperial College Business School & Centre for Health Policy
University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO); University of Bristol - Department of Economics; Centre for Economic Policy Research (CEPR)
NBER Working Paper No. w17608
The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.
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Number of Pages in PDF File: 37working papers series
Date posted: November 21, 2011
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