Research / BFI Working PaperNov 08, 2021

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

Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson, Shruthi Venkatesh

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.

More Research From These Scholars

BFI Working Paper Jun 18, 2020

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

Austan Goolsbee, Chad Syverson
Topics:  COVID-19
BFI Working Paper Jul 15, 2019

Monopsony Power in Higher Education: A Tale of Two Tracks

Austan Goolsbee, Chad Syverson
Topics:  Higher Education & Workforce Training
BFI Working Paper Sep 13, 2021

An Industrial Organization Perspective on Productivity

Jan De Loecker, Chad Syverson
Topics:  Employment & Wages