The Anatomy of a Hospital System Merger: The Patient Did Not Respond Well to Treatment

47 Pages Posted: 14 Nov 2021

See all articles by Martin Gaynor

Martin Gaynor

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

Adam Sacarny

Columbia University

Raffaella Sadun

Harvard University - Strategy Unit; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Chad Syverson

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Shruthi Venkatesh

Carnegie Mellon University

Multiple version iconThere are 3 versions of this paper

Date Written: November 8, 2021

Abstract

There is an ongoing merger wave in the US hospital industry, but it remains an open question how hospital mergers change, or fail to change, hospital behavior, performance, and outcomes. In this research, we open the “black box” of practices within hospitals in the context of a mega-merger between two large for-profit chains. Benchmarking the effects of the merger against the acquirer’s stated aims, we show that they achieved some of their goals: they harmonized their electronic medical records and sent managers to target hospitals; after the acquisition, managerial processes were similar across hospitals in the merged chain. However, these interventions failed to drive detectable gains in profitability or patient outcomes. Our findings demonstrate the importance of hospital organizations and internal processes for merger research and policy in health care and the economy more generally.

JEL Classification: D22,I11,M12

Suggested Citation

Gaynor, Martin and Sacarny, Adam and Sadun, Raffaella and Syverson, Chad and Venkatesh, Shruthi, The Anatomy of a Hospital System Merger: The Patient Did Not Respond Well to Treatment (November 8, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-132, Available at SSRN: https://ssrn.com/abstract=3961070 or http://dx.doi.org/10.2139/ssrn.3961070

Martin Gaynor

Carnegie Mellon University ( email )

H. John Heinz III School of Public Policy
and Management
Pittsburgh, PA 15213-3890
United States
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National Bureau of Economic Research (NBER)

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Leverhulme Centre for Market and Public Organisation

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Adam Sacarny

Columbia University

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Raffaella Sadun

Harvard University - Strategy Unit ( email )

Harvard Business School
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HOME PAGE: http://people.hbs.edu/rsadun

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Chad Syverson (Contact Author)

University of Chicago - Booth School of Business ( email )

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United States

National Bureau of Economic Research (NBER)

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Shruthi Venkatesh

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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