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Consolidations and closures: an empirical analysis of exits from the hospital industry

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Author Info
Teresa D. Harrison (Department of Economics, LeBow College of Business, Drexel University, Philadelphia, USA)
Abstract

This paper investigates the pre-exit characteristics of hospital mergers, acquisitions, and closures. We estimate competing risk hazard models using an 18-year national data set that spans the wave of closures in the 1980s and of mergers in the 1990s. Evidence shows that weak productivity of the hospital is a strong determinant for closures while competitive pressures are more influential in the decision to consolidate. Thus, increased market power, relative to cost reductions, appears to play a larger role in the merger decision. Our results also provide insight into possible correlations between mergers and closures. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1174
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 16 (2007)
Issue (Month): 5 ()
Pages: 457-474
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:16:y:2007:i:5:p:457-474

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. McCall, B.P., 1993. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Papers 93-07, Minnesota - Industrial Relations Center.
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  2. Butler, J S & Anderson, Kathryn H & Burkhauser, Richard V, 1989. "Work and Health after Retirement: A Competing Risks Model with Semiparametric Unobserved Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 46-53, February. [Downloadable!] (restricted)
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  5. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June. [Downloadable!] (restricted)
  6. Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M. [Downloadable!] (restricted)
  7. Ugur Tony Sinay, 1998. "Pre- and Post-Merger Investigation of Hospital Mergers," Eastern Economic Journal, Eastern Economic Association, vol. 24(1), pages 83-97, Winter. [Downloadable!]
  8. Melnick, Glenn A. & Zwanziger, Jack & Bamezai, Anil & Pattison, Robert, 1992. "The effects of market structure and bargaining position on hospital prices," Journal of Health Economics, Elsevier, vol. 11(3), pages 217-233, October. [Downloadable!] (restricted)
  9. Narendranathan, Wiji & Stewart, Mark B, 1991. "Simple Methods for Testing for the Proportionality of Cause-Specific Hazards in Competing Risk Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(3), pages 331-40, August.
  10. Dolton, Peter & van der Klaauw, Wilbert, 1994. "The Turnover of UK Teachers: A Competing Risks Analysis," Working Papers 94-21, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  11. 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. [Downloadable!] (restricted)
  12. Tong Li & Robert Rosenman, 2001. "Estimating hospital costs with a generalized Leontief function," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 523-538. [Downloadable!]
  13. Lynk, William J, 1995. "Nonprofit Hospital Mergers and the Exercise of Market Power," Journal of Law & Economics, University of Chicago Press, vol. 38(2), pages 437-61, October.
  14. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-26, March. [Downloadable!] (restricted)
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  15. Sueyoshi, Glenn T., 1992. "Semiparametric proportional hazards estimation of competing risks models with time-varying covariates," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 25-58. [Downloadable!] (restricted)
  16. Paul W. Wilson & Kathleen Carey, 2004. "Nonparametric analysis of returns to scale in the US hospital industry," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(4), pages 505-524. [Downloadable!]
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