IDEAS home Printed from https://ideas.repec.org/a/wly/canjec/v58y2025i3p940-960.html

Physical restructuring and merger outcomes in Ontario hospitals

Author

Listed:
  • Eliane H. Barker
  • Jenny Watt

Abstract

Hospitals in public and private healthcare systems frequently undergo mergers despite mixed evidence on their effects on quality and cost. We use confidential health data from Ontario to evaluate the effect of hospital mergers on measures of hospital quality, capacity and financial status. In particular, we investigate the claim that hospital mergers involving physical restructuring are more likely to improve these measures than hospital mergers that are administrative in nature. Our primary analysis finds little evidence of an impact of hospital mergers on quality of care. While neither type of merger has an impact on most measures of financial status, mergers are associated with a reduction in total expenses that is greater when the merger involves physical restructuring (with the caveat that both types of merged hospitals produce fewer inpatient cases post‐merger). Les hôpitaux des systèmes de santé publics et privés font souvent l'objet de fusions, bien que les preuves de leurs effets sur la qualité et les coûts soient mitigées. Nous utilisons des données confidentielles sur la santé en Ontario pour évaluer l'effet des fusions d'hôpitaux sur les indicateurs de la qualité, de la capacité et de la situation financière des hôpitaux. En particulier, nous étudions l'affirmation que les fusions d'hôpitaux comportant une restructuration physique sont plus susceptibles d'améliorer ces indicateurs que les fusions administratives. Notre analyse primaire ne démontre guère l'effet des fusions sur la qualité des soins. Les fusions, peu importe le type, n'ont pas d'influence sur la plupart des indicateurs financiers, mais il y a un lien avec la réduction des dépenses totales, qui est plus grande lorsque la fusion comporte une restructuration physique (avec la réserve qu'il y a moins de patients hospitalisés dans les deux types d'hôpitaux résultants après la fusion).

Suggested Citation

  • Eliane H. Barker & Jenny Watt, 2025. "Physical restructuring and merger outcomes in Ontario hospitals," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(3), pages 940-960, August.
  • Handle: RePEc:wly:canjec:v:58:y:2025:i:3:p:940-960
    DOI: 10.1111/caje.70016
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/caje.70016
    Download Restriction: no

    File URL: https://libkey.io/10.1111/caje.70016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    2. Schmitt, Matt, 2017. "Do hospital mergers reduce costs?," Journal of Health Economics, Elsevier, vol. 52(C), pages 74-94.
    3. 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.
    4. Ryan Mutter & Patrick Romano & Herbert Wong, 2011. "The Effects of US Hospital Consolidations on Hospital Quality," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 109-126.
    5. Paul J Eliason & Benjamin Heebsh & Ryan C McDevitt & James W Roberts, 2020. "How Acquisitions Affect Firm Behavior and Performance: Evidence from the Dialysis Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 221-267.
    6. Ho, Vivian & Hamilton, Barton H., 2000. "Hospital mergers and acquisitions: does market consolidation harm patients?," Journal of Health Economics, Elsevier, vol. 19(5), pages 767-791, September.
    7. 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.
    8. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    9. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does Hospital Competition Save Lives? Evidence From The English NHS Patient Choice Reforms," Economic Journal, Royal Economic Society, vol. 121(554), pages 228-260, August.
    10. Patrick Romano & David Balan, 2011. "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, Taylor & Francis Journals, vol. 18(1), pages 45-64.
    11. J Harris & H Ozgen & Y Ozcan, 2000. "Do mergers enhance the performance of hospital efficiency?," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(7), pages 801-811, July.
    12. Gaynor, Martin & Anderson, Gerard F., 1995. "Uncertain demand, the structure of hospital costs, and the cost of empty hospital beds," Journal of Health Economics, Elsevier, vol. 14(3), pages 291-317, August.
    13. Siciliani, Luigi & Straume, Odd Rune, 2019. "Competition and equity in health care markets," Journal of Health Economics, Elsevier, vol. 64(C), pages 1-14.
    14. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2017. "Hospital Mergers with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 597-627, July.
    15. Francesco Longo & Luigi Siciliani & Giuseppe Moscelli & Hugh Gravelle, 2019. "Does hospital competition improve efficiency? The effect of the patient choice reform in England," Health Economics, John Wiley & Sons, Ltd., vol. 28(5), pages 618-640, May.
    16. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vanessa Cirulli & Giorgia Marini, 2023. "Do mergers really increase output? Evidence from English hospitals," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 159-189, March.
    2. Lyu, Yuan & Zhang, Zhaocheng, 2025. "Impact of primary care market mergers on quality: Evidence from the English NHS," Journal of Health Economics, Elsevier, vol. 104(C).
    3. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2013. "Hospital Mergers: A Spatial Competition Approach," NIPE Working Papers 04/2013, NIPE - Universidade do Minho.
    4. Balia, S.; & Brau, R.; & Pau, S.;, 2025. "One plus one makes less than two? Consolidation policies and mortality in the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 25/02, HEDG, c/o Department of Economics, University of York.
    5. Johann Han & Nadja Kairies‐Schwarz & Markus Vomhof, 2017. "Quality competition and hospital mergers—An experiment," Health Economics, John Wiley & Sons, Ltd., vol. 26(S3), pages 36-51, December.
    6. Cirulli, Vanessa & Marini, Giorgia & Marini, Marco A. & Straume, Odd Rune, 2025. "Do hospital mergers reduce waiting times? Theory and evidence from the English NHS," Journal of Economic Behavior & Organization, Elsevier, vol. 238(C).
    7. repec:nip:nipewp:10/2014 is not listed on IDEAS
    8. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    9. S. Balia & R. Brau & S. Pau, 2025. "One plus one makes less than two? Consolidation policies and mortality in the Italian NHS," Working Paper CRENoS 202502, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    10. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2017. "Hospital Mergers with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 597-627, July.
    11. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    12. Ghislandi, Simone & Renner, Anna-Theresa & Varghese, Nirosha Elsem, 2025. "The impact of budget cuts on individual patient health: Causal evidence from hospital closures," Journal of Health Economics, Elsevier, vol. 101(C).
    13. 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.
    14. Gaughan, James & Siciliani, Luigi & Gravelle, Hugh & Moscelli, Giuseppe, 2020. "Do small hospitals have lower quality? Evidence from the English NHS," Social Science & Medicine, Elsevier, vol. 265(C).
    15. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    16. Bhattacharjee, Arnab & Aravena, Claudia & Castillo, Natalia & Ehrlich, Marco & Taou, Nadia & Wagner, Thomas, 2022. "Agroforestry Programs in the Colombian Amazon: Selection, Treatment and Exposure Effects on Deforestation," National Institute of Economic and Social Research (NIESR) Discussion Papers 537, National Institute of Economic and Social Research.
    17. Joaquín Matías Liwski, 2023. "Should I stay or should I go? Effects of being acquired on employee outcomes: evidence from Brazil," Young Researchers Working Papers 13, Universidad de San Andres, Departamento de Economia, revised Feb 2023.
    18. 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, Center for Labor Studies 2014:9, Uppsala University, Department of Economics.
    19. Bisceglia, Michele & Padilla, Jorge & Piccolo, Salvatore & Sääskilahti, Pekka, 2023. "On the bright side of market concentration in a mixed-oligopoly healthcare industry," Journal of Health Economics, Elsevier, vol. 90(C).
    20. Coulibaly, Yacouba & Diallo, Askandarou Cheik, 2025. "Can fiscal rules improve banking system stability in developing countries?," Journal of Macroeconomics, Elsevier, vol. 86(C).
    21. Pengju Zhang, 2023. "The fiscal and economic impacts of municipal dissolution: evidence from New York," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 948-1001, August.

    More about this item

    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:wly:canjec:v:58:y:2025:i:3:p:940-960. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1540-5982 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.