Merger mania Three

MergerMania

I wanna go to America

I wanna be where the air is clear

Everything free in America.

I wanna be in Amereeeka

                   West Side Story.

 

Up until the three good guys from Bristol University (www.bristol.ac.uk/cmpo) did their study, the only studies on Hospital mergers dealt with what happened in America in the 1980’s and 1990’s.

Historically, American Hospitals, which are mainly private, were smaller than British Hospitals which are State owned. As hard times hit in the 1980’s recession, they lost business and had to merge or take over each other to survive.

I quote from the report;

 

“Analysis of private hospital mergers in the USA has generally concluded that these mergers bring little benefits in terms of prices and costs (e.g. Dranove and Lindrooth, 2003; Harrison, 2010; Vogt and Town 2006).

Our study is therefore more similar to studies which have examined the impacts of large numbers of hospital mergers in the US during the 1990s (e.g., Dafny, 2009; Ho and Hamilton, 2000; Krishnan, 2001; Spang et al., 2001; Town et al., 2006).

These studies find, in general, little benefit from merger and consolidation. These mergers are the result of private decisions, as opposed to central planning, and hospitals are mostly private firms.”

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Now that’s interesting. You would have thought that the super efficiency of the free market – and, hey, I am talking about the American Free Market here, would have meant that merging Hospitals would have produced more efficiency, better patient outcomes and economic benefits.

Apparently not so.

So, the report then took a look at mergers which happened as a result of the actions of a state regulator, as happened in Britain 1997 to 2004.                                                                          

MergerMania

Neil Harris

(a don’t stop till you drop production)

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