MergerMania
Now we need
to take a look at what the report was studying;
“In our analysis we focus on merger activity between short
term general (known as acute in the UK) hospitals. The extent of merger
activity was high and took place predominantly in the six years after 1997. Of
around 223 acute hospitals in 1997, 112 merged sometime between 1997 and
2006. There were around 20 mergers per
year, rising to a peak in 2001 and falling to zero after 2002……..The median
hospital market went from 7 to 5 hospitals.”
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The report
deals with the period after the election of the last Labour government in 1997
– the scale of closures is incredible (and not what anyone voted for), about
half of acute Hospitals and a quarter of the total.
The effect
of this slaughter can be seen in the phrase about “median hospital market” –
that means choice of local Hospitals – choice went down.
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“Using matching, we compare the change in performance of
those hospitals that merged with those that did not over a 6 year window,
looking at performance from two years before to four years after the merger
date.
We examine activity, staffing and financial performance and a
large set of measures of clinical quality.”
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The report
established a control group of Hospitals that hadn’t merged and compared these
with those that had, to work out whether it had been a good deal or not.
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Why was
this happening?
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“Drivers for mergers have included facilitating hospital or
service closures as a response to a belief there is spare capacity in the short
term general (acute) sector, securing financial viability of smaller
organisations and increasing their negotiating power with buyers and enlarging
the hospital to provide better services for the buyers of services (Garside
1999). While a reduction in average costs by better use of resources (Ferguson
and Goddard 1997) is used to justify mergers, in the UK the focus has tended to
be on better use of management costs rather than hospital wide economies of
scale (McClenahan 1999). This is perhaps because UK hospitals are relatively
large (in comparison to the average US hospital). A study of NHS hospital
mergers in London in 1999-2000 (the earlier of the mergers we examine here)
identified financial pressures as the most important driver of mergers during
this period. The need to make savings featured in all consultation documents.
More specifically, most of the merging parties had financial deficits and it
was argued that mergers would reduce these. The main costs identified as being
potentially saveable were management and back office costs, rather than a
reduction in clinical costs.”
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The aim was
to reduce costs – bigger is better, or at least more efficient. The hope was
that it would be possible to cut management costs while providing better clinical
outcomes.
Health
Service Civil Servants thought having fewer, bigger Hospitals would mean less
managers and better buying power and therefore more money for Doctors, Nurses
and patients.
For some
unknown reason in 1997 they also seem to have thought that there were surplus
beds to be got rid of?!?
Who thought
that one up?
Can we have
our beds back, please?
More ice
needed, my head hurts!
MergerMania
Neil Harris
(a don’t stop till you drop production)
CMPO: www.bristol.ac.uk/CMPO
Home:
helpmesortoutstpeters.blogspot.comContact: neilwithpromisestokeep@gmail.com
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