Do Mergers Really Reduce Costs? Evidence from Hospitals

16 Pages Posted: 21 Sep 2011  

Teresa D. Harrison

Drexel University - Department of Economics & International Business

Date Written: October 2011

Abstract

In this paper, we compare potential and realized cost savings from hospital mergers. Our approach isolates changes in realized cost savings due to different output mixes from systematic changes due to time and also provides a measure of the potential cost savings due to scale economies. Our findings suggest that economies of scale are present for merging hospitals and they realize these cost savings immediately following a merger. However, we also show that over time, cost savings from the merger decrease and the proportion of hospitals experiencing positive cost savings declines.

JEL Classification: L1, I11, C14

Suggested Citation

Harrison, Teresa D., Do Mergers Really Reduce Costs? Evidence from Hospitals (October 2011). Economic Inquiry, Vol. 49, Issue 4, pp. 1054-1069, 2011. Available at SSRN: https://ssrn.com/abstract=1931348 or http://dx.doi.org/10.1111/j.1465-7295.2010.00246.x

Teresa D. Harrison (Contact Author)

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Paper statistics

Downloads
2
Abstract Views
570