Can Governments Do it Better? Merger Mania and Hospital Outcomes in the English NHS

37 Pages Posted: 21 Nov 2011

See all articles by Martin Gaynor

Martin Gaynor

Carnegie Mellon University; National Bureau of Economic Research (NBER); Leverhulme Centre for Market and Public Organisation

Mauro Laudicella

Imperial College Business School & Centre for Health Policy

Carol Propper

Imperial College London Business School; Centre for Economic Policy Research (CEPR); University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2011

Abstract

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.

Suggested Citation

Gaynor, Martin and Laudicella, Mauro and Propper, Carol, Can Governments Do it Better? Merger Mania and Hospital Outcomes in the English NHS (November 2011). NBER Working Paper No. w17608. Available at SSRN: https://ssrn.com/abstract=1962500

Martin Gaynor (Contact Author)

Carnegie Mellon University ( email )

H. John Heinz III School of Public Policy
and Management
Pittsburgh, PA 15213-3890
United States
412-268-7933 (Phone)
412-268-5338 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Leverhulme Centre for Market and Public Organisation

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United Kingdom

Mauro Laudicella

Imperial College Business School & Centre for Health Policy ( email )

Tanaka Building
South Kensington Campus
London SW7 2AZ, SW7 2AZ
United Kingdom
+44 (0)20 7594 9765 (Phone)
+44 (0)20 7594 9189 (Fax)

HOME PAGE: http://www3.imperial.ac.uk/people/m.laudicella

Carol Propper

Imperial College London Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/propper.htm

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