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

Author

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  • Martin Gaynor
  • Mauro Laudicella
  • Carol Propper

    ()

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.

Suggested Citation

  • Martin Gaynor & Mauro Laudicella & Carol Propper, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," The Centre for Market and Public Organisation 12/281, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:cmpowp:12/281
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    References listed on IDEAS

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    Cited by:

    1. Osea Giuntella & Catia Nicodemo & Carlos Vargas Silva, 2015. "The Effects of Immigration on NHS Waiting Times," Economics Papers 2015-W04, Economics Group, Nuffield College, University of Oxford.
    2. repec:ces:ifodic:v:11:y:2013:i:1:p:19083485 is not listed on IDEAS
    3. 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.
    4. Carol Propper, 2013. "Competition, Incentives and the English NHS," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 16-20, 04.
    5. Christina DePasquale, 2014. "Hospital Consolidation and the Nurse Labor Market," Emory Economics 1413, Department of Economics, Emory University (Atlanta).
    6. Francesco Longo & Luigi Siciliani & Hugh Gravelle & Rita Santos, 2017. "Do hospitals respond to rivals’ quality and efficiency? a spatial econometrics approach," Working Papers 144cherp, Centre for Health Economics, University of York.
    7. Karmann, Alexander & Roesel, Felix, 2016. "Hospital policy and productivity: Evidence from German states," CEPIE Working Papers 07/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    8. 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.
    9. Schmid, Andreas & Varkevisser, Marco, 2016. "Hospital merger control in Germany, the Netherlands and England: Experiences and challenges," Health Policy, Elsevier, vol. 120(1), pages 16-25.
    10. 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.
    11. Helda Azevedo & Céu Mateus, 2014. "Cost effects of hospital mergers in Portugal," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 999-1010, December.
    12. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2013. "Hospital Mergers: A Spatial Competition Approach," Discussion Paper Series in Economics 8/2013, Norwegian School of Economics, Department of Economics.
    13. Avdic, Daniel & Lundborg, Petter & Vikström, Johan, 2014. "Learning-by-Doing in a High-Skill Profession when Stakes are High: Evidence from Advanced Cancer Surgery," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100278, Verein für Socialpolitik / German Economic Association.
    14. 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.
    15. Silviya Nikolova & Arthur Sinko & Matt Sutton, 2015. "Do maximum waiting time guarantees change clinical priorities for elective treatment? Evidence from Scotland," Working Papers 1501, Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds.
    16. Nikolova, Silviya & Sinko, Arthur & Sutton, Matt, 2015. "Do maximum waiting times guarantees change clinical priorities for elective treatment? Evidence from Scotland," Journal of Health Economics, Elsevier, vol. 41(C), pages 72-88.
    17. repec:nip:nipewp:10/2014 is not listed on IDEAS
    18. Sagaon-Teyssier, Luis & Fressard, Lisa & Mora, Marion & Maradan, Gwenaëlle & Guagliardo, Valérie & Suzan-Monti, Marie & Dray-Spira, Rosemary & Spire, Bruno, 2016. "Larger is not necessarily better! Impact of HIV care unit characteristics on virological success: results from the French national representative ANRS-VESPA2 study," Health Policy, Elsevier, vol. 120(8), pages 936-947.

    More about this item

    Keywords

    Hospital mergers; event study; quality; political influence.;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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