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

By: Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson and Shruthi Venkatesh

Format:Print
| Language:English

Abstract

There is an ongoing merger wave in the U.S. 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.

Keywords

Hospital Mergers; Health Care and Treatment; Mergers and Acquisitions; Performance Effectiveness; Outcome or Result; Analysis; United States

Citation

Gaynor, Martin, Adam Sacarny, Raffaella Sadun, Chad Syverson, and Shruthi Venkatesh. "The Anatomy of a Hospital System Merger: The Patient Did Not Respond Well to Treatment." NBER Working Paper Series, No. 29449, November 2021.