Transforming Health Care Through Evidence and Collaboration
Transforming Health Care Through Evidence and Collaboration

Hospital Consolidation: Trends, Impacts & Outlook: Citations & Notes

Slide 4 

Data from Kaufman, Hall & Associates, LLC: “2017 in Review: The Year M&A Shook the Healthcare Landscape.” and “2018 M&A in Review: A New Healthcare Landscape Takes Shape.” The figures reflect all publicly disclosed acquisitions, mergers, joint ventures and joint operating agreements involving acute care hospitals or hospital systems. Not all announced deals were ultimately finalized.

Slide 5 

Data from Kaufman, Hall & Associates, LLC. “2018 M&A in Review: A New Healthcare Landscape Takes Shape.” 

Slide 10 

a Summary points are drawn from numerous articles reporting individual studies as well as from research syntheses, including the following:

  • Capps C and Dranove D. “Hospital Consolidation and Negotiated PPO Prices.” Health Affairs, 23(1):175-81, March/April 2004.
  • Cooper Z, Craig SV, Gaynor M and Van Reenen J. “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured.” Quarterly Journal of Economics, 134(1):51-107, February 2019.
  • Dafny L. “Estimation and Identification of Merger Effects: An Application to Hospital Mergers.” The Journal of Law and Economics, 52(3):523-50, August 2009.
  • Gaynor M, Ho K, and Town RJ. “The Industrial Organization of Health Care Markets.” Journal of Economic Literature, 53(2):235-85, June 2015.
  • Gaynor M and Town R. “Competition in Health Care Markets.” In Pauly MV, McGuire TG, and Barros PP, editors, Handbook of Health Economics, Volume 2, Chapter 9 (2011).
  • Gaynor M and Town R. “The Impact of Hospital Consolidation – Update.” Robert Wood Johnson Foundation, Update to Research Synthesis Report No. 9, June 2012.
  • Gaynor M and Vogt WB. “Competition Among Hospitals.” The RAND Journal of Economics, 34(4):764-85, Winter 2003.
  • Gowrisankaran G, Nevo A, and Town R. “Mergers When Prices Are Negotiated: Evidence from the Hospital Industry.” American Economic Review, 105(1):172-203, January 2015.
  • Haas-Wilson D and Garmon C. “Hospital Mergers and Competitive Effects: Two Retrospective Analyses.” International Journal of the Economics of Business, 18(1):17-32, February 2011.
  • Tenn S. ”The Price-Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction.” International Journal of the Economics of Business, 18(1):65-82, February 2011.
  • Thompson A. “The Effect of Hospital Mergers on Inpatient Prices: A Case Study of the New Hanover-Cape Fear Transaction." International Journal of the Economics of Business, 18(1):91-101, February 2011.
  • Vita MG and Sacher S. “The Competitive Effects of Not-for-Profit Hospital Mergers: A Case Study.” Journal of Industrial Economics, 49(1):63-84, March 2001.
  • Vogt WB and Town R. “How Has Hospital Consolidation Affected the Price and Quality of Hospital Care?” Robert Wood Johnson Foundation, Research Synthesis Report No. 9, February 2006.

b Dafny L, Ho K and Lee RS. “The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry.” The RAND Journal of Economics, forthcoming.
c Lewis MS and Pflum KE. “Hospital Systems and Bargaining Power: Evidence from Out-of-Market Acquisitions.” The RAND Journal of Economics, 48(3):579-610, Fall 2017.
d Schmitt M. “Multimarket Contact in the Hospital Industry.” American Economic Journal: Economic Policy, 10(3):361-87, August 2018.

Slide 11 

a Summary points drawn from numerous articles reporting individual studies as well as from research syntheses, including the following:

  • Capps C. “The Quality Effects of Hospital Mergers,” Department of Justice, Economic Analysis Group Discussion Paper 05–6. 2005.
  • Cooper Z, Gibbons S, Jones S and McGuire A. “Does Hospital Competition Save Lives? Evidence from the English NHS Patient Choice Reforms.” Economic Journal, 121(554):F228-60, August 2011.
  • Gaynor M, Ho K, and Town R. “The Industrial Organization of Health Care Markets.” Journal of Economic Literature, 53(2):235-85, June 2015.
  • Gaynor M, Moreno-Serra R, and Propper C. “Death by Market Power: Reform, Competition and Patient Outcomes in the British National Health Service.” American Economic Journal: Economic Policy, 5(4)134-66, November 2013.
  • Gaynor M and Town R. “The Impact of Hospital Consolidation – Update.” Robert Wood Johnson Foundation, Update to Research Synthesis Report No. 9, June 2012.
  • Ho V and Hamilton BH. “Hospital Mergers and Acquisitions: Does Market Consolidation Harm Patients?" Journal of Health Economics, 19(5):767-91, September 2000.
  • Kessler DP and McClellan MB. “Is Hospital Competition Socially Wasteful?” The Quarterly Journal of Economics, 115(2):577-625, May 2000.
  • Kessler DP and Geppert JJ. “The Effects of Competition on Variation in the Quality and Cost of Medical Care.” Journal of Economics and Management Strategy, 14(3):575-89, July 2005.
  • Noether M and May S. “Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis.” Charles River Associates, January 2017.
  • Romano PS and Balan DJ. “A Retrospective Analysis of the Clinical Quality Effects of the Acquisition of Highland Park Hospital by Evanston Northwestern Healthcare.” International Journal of the Economics of Business, 18(1):45–64. February 2011.
  • Short MN and Ho V. “Weighing the Effects of Vertical Integration Versus Market Concentration on Hospital Quality.” Medical Care Research and Review, published online February 9, 2019.
  • Vogt WB and Town R. “How Has Hospital Consolidation Affected the Price and Quality of Hospital Care?” Robert Wood Johnson Foundation, Research Synthesis Report No. 9, February 2006.

b Burns LR, McCullough J, Wholey D, et al. “Is the System Really the Solution? Operating Costs in Hospital Systems,” Medical Care Research and Review 72(3):247-72, June 2015.
c Schmitt M. “Do Hospital Mergers Reduce Costs?” Journal of Health Economics, 52:74-94, March 2017.
d Noether M and May S. “Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis.” Charles River Associates, January 2017.
e Knapp C, Peterson J, Gundling R, Mulvany C, and Gerhardt W. “Hospital M&A: When Done Well, M&A Can Achieve Valuable Outcomes.” Report from Deloitte and the Health Care Financial Management Association, 2017. 
f Noether M and May S. “Hospital Merger Benefits, A Review and Extension.” Charles River Associates, December 2018.
g Craig S, Grennan M and Swanson A. "Mergers and Marginal Costs: New Evidence on Hospital Buyer Power." March 27, 2019.
h
Dranove D and Lindrooth R. “Hospital Consolidation and Costs: Another Look at the Evidence.” Journal of Health Economics, 22(6):983-97, November 2003.
i Vogt WB and Town R. “How Has Hospital Consolidation Affected the Price and Quality of Hospital Care?” Robert Wood Johnson Foundation, Research Synthesis Report No. 9, February 2006.

Slide 14 

Number of announced consolidations is from Kaufman, Hall & Associates, LLC: “2017 in Review: The Year M&A Shook the Healthcare Landscape” and “2018 M&A in Review: A New Healthcare Landscape Takes Shape.” 

FTC case history is from https://www.ftc.gov/enforcement/cases-proceedings.

Slide 15 

a Seminal studies of cross-market regional mergers include:

  • Vistnes G and Sarafidis Y. “Cross-Market Hospital Mergers: A Holistic Approach.” Antitrust Law Journal, 79(1):253-91, 2013.
  • Dafny L, Ho K and Lee RS. “The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry.” The RAND Journal of Economics, forthcoming.

Slide 16 

a A framework for studying multimarket contact was developed and tested in Schmitt M. “Multimarket Contact in the Hospital Industry.” American Economic Journal: Economic Policy, 10(3):361-87, August 2018.

Slide 17 

Recent analyses of COPAs include:

Slide 18 

a The policy recommendations presented here have been promoted to varying degrees in the following recent reports and publications: