Hospital consolidation and costs: Another look at the evidence

David Dranove, Richard Lindrooth*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

108 Scopus citations

Abstract

We investigate whether pairwise hospital consolidation leads to cost savings. We use a unified empirical methodology to assess both systems and mergers. Our comparison group for each consolidation consists of 10 'pseudo-mergers' chosen based on propensity scores. Cost function estimates reveal that consolidation into systems does not generate savings, even after 4 years. Mergers in which hospitals consolidate financial reporting and licenses generate savings of approximately 14%: 2, 3, and 4 years after merger. The system consolidation and merger results are very robust to changes in the specification and the sample.

Original languageEnglish (US)
Pages (from-to)983-997
Number of pages15
JournalJournal of Health Economics
Volume22
Issue number6
DOIs
StatePublished - Nov 2003

Keywords

  • Hospital competition
  • Hospital consolidation
  • Mergers

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

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