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Can governments do it better? Merger mania and hospital outcomes in the English NHS

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Author Info

  • Gaynor, Martin
  • Laudicella, Mauro
  • Propper, Carol

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 mergers, arguing that such consolidations will bring improvements for patients. 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. Given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 31 (2012)
Issue (Month): 3 ()
Pages: 528-543

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Handle: RePEc:eee:jhecon:v:31:y:2012:i:3:p:528-543

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Hospital mergers; Event study; Quality; Political influence;

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References

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  1. Martin Gaynor & Robert J Town, 2012. "Competition in Health Care Markets," The Centre for Market and Public Organisation 12/282, Department of Economics, University of Bristol, UK.
  2. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2010. "Does hospital competition save lives?: evidence from the English NHS patient choice reforms," LSE Research Online Documents on Economics 28584, London School of Economics and Political Science, LSE Library.
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  4. Dranove, David & Lindrooth, Richard, 2003. "Hospital consolidation and costs: another look at the evidence," Journal of Health Economics, Elsevier, vol. 22(6), pages 983-997, November.
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  7. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
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  15. Caroline M. Hoxby, 2007. "Does Competition Among Public Schools Benefit Students and Taxpayers? Reply," American Economic Review, American Economic Association, vol. 97(5), pages 2038-2055, December.
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  18. Patrick Bayer & Robert McMillan, 2005. "Choice and Competition in Local Education Markets," NBER Working Papers 11802, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Jones, Lorelei & Exworthy, Mark & Frosini, Francesca, 2013. "Implementing market-based reforms in the English NHS: Bureaucratic coping strategies and social embeddedness," Health Policy, Elsevier, vol. 111(1), pages 52-59.
  2. Carol Propper, 2012. "Competition, incentives and the English NHS," Health Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 33-40, 01.
  3. Avdic, Daniel & Lundborg, Petter & Vikström, Johan, 2014. "Learning-by-doing in a highly skilled profession when stakes are high: evidence from advanced cancer surgery," Working Paper Series 2014:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2013. "Hospital Mergers: A Spatial Competition Approach," Discussion Paper Series in Economics 8/2013, Department of Economics, Norwegian School of Economics.
  5. Vincenzo Atella & Federico Belotti & Silvio Daidone & Giuseppe Ilardi & Giorgia Marini, 2012. "Cost-containment policies and hospital efficiency: evidence from a panel of Italian hospitals," CEIS Research Paper 228, Tor Vergata University, CEIS, revised 13 Apr 2012.
  6. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2014. "Hospital Mergers with Regulated Prices," NIPE Working Papers 10/2014, NIPE - Universidade do Minho.

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