IDEAS home Printed from https://ideas.repec.org/a/bla/randje/v52y2021i1p151-178.html
   My bibliography  Save this article

Mergers and marginal costs: New evidence on hospital buyer power

Author

Listed:
  • Stuart V. Craig
  • Matthew Grennan
  • Ashley Swanson

Abstract

We estimate the effects of hospital mergers, using detailed data containing medical supply transactions (representing 23% of operating costs) from a sample of US hospitals, 2009–2015. Pre‐merger price variation across hospitals (Gini coefficient 7%) suggests significant opportunities for cost decreases. However, we observe limited evidence of actual savings. In this retrospective study, targets realized 1.9% savings; acquirers realized no significant savings. Examining treatment effect heterogeneity to shed light on theories of “buyer power,” we find that savings, when they occur, tend to be local, and potential benefits of savings may be offset by managerial costs of merging.

Suggested Citation

  • Stuart V. Craig & Matthew Grennan & Ashley Swanson, 2021. "Mergers and marginal costs: New evidence on hospital buyer power," RAND Journal of Economics, RAND Corporation, vol. 52(1), pages 151-178, March.
    • Handle: RePEc:bla:randje:v:52:y:2021:i:1:p:151-178
    DOI: 10.1111/1756-2171.12365
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1756-2171.12365
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sharat Ganapati & Rebecca McKibbin, 2019. "Non-Tariff Barriers and Bargaining in Generic Pharmaceuticals," Working Papers gueconwpa~18-18-23, Georgetown University, Department of Economics.
    2. Javier Donna & Andre Trindade & Pedro Pereira & Tiago Pires, 2018. "Measuring the Welfare of Intermediation in Vertical Markets," 2018 Meeting Papers 984, Society for Economic Dynamics.
    3. Donna, Javier D. & Pereira, Pedro & Pires, Tiago & Trindade, Andre, 2018. "Measuring the Welfare of Intermediaries in Vertical Markets," MPRA Paper 90465, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:52:y:2021:i:1:p:151-178. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: https://edirc.repec.org/data/randdus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.