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

  • Propper, C
  • Laudicella, M
  • Gaynor, M

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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Paper provided by Imperial College, London, Imperial College Business School in its series Working Papers with number 9184.

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Date of creation: Jan 2012
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Handle: RePEc:imp:wpaper:9184
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  11. Robert Town & Douglas Wholey & Roger Feldman & Lawton R. Burns, 2006. "The Welfare Consequences of Hospital Mergers," NBER Working Papers 12244, National Bureau of Economic Research, Inc.
  12. 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.
  13. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does hospital competition save lives? Evidence from the English NHS patient choice reforms," LSE Research Online Documents on Economics 45167, London School of Economics and Political Science, LSE Library.
  14. 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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  16. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  17. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  18. Teresa D. Harrison, 2011. "Do Mergers Really Reduce Costs? Evidence From Hospitals," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 1054-1069, October.
  19. Krishnan, Ranjani, 2001. "Market restructuring and pricing in the hospital industry," Journal of Health Economics, Elsevier, vol. 20(2), pages 213-237, March.
  20. Leemore Dafny, 2009. "Estimation and Identification of Merger Effects: An Application to Hospital Mergers," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 523-550, 08.
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  22. Andrew Hutchings & Pauline Allen & Naomi Fulop & Annette King & Gerasimos Protopsaltis & Charles Normand & Rhiannon Walters, 2003. "The Process and Impact of Trust Mergers in the National Health Service: A Financial Perspective," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 23(2), pages 103-112, 04.
  23. Girma, Sourafel & Görg, Holger, 2006. "Evaluating the Foreign Ownership Wage Premium Using a Difference-in-Differences Matching Approach," CEPR Discussion Papers 5788, C.E.P.R. Discussion Papers.
  24. Jesse Rothstein, 2007. "Does Competition Among Public Schools Benefit Students and Taxpayers? Comment," American Economic Review, American Economic Association, vol. 97(5), pages 2026-2037, December.
  25. Andrew Hutchings & Pauline Allen & Naomi Fulop & Annette King & Gerasimos Protopsaltis & Charles Normand & Rhiannon Walters, 2003. "The Process and Impact of Trust Mergers in the National Health Service: A Financial Perspective," Public Money & Management, Taylor & Francis Journals, vol. 23(2), pages 103-112, April.
  26. Aileen Thompson, 2011. "The Effect of Hospital Mergers on Inpatient Prices: A Case Study of the New Hanover-Cape Fear Transaction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 91-101.
  27. Steven Tenn, 2011. "The Price Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 65-82.
  28. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
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