Working Paper: CEPR ID: DP16787
Authors: Martin Gaynor; Adam Sacarny; Raffaella Sadun; Chad Syverson; Shruthi Venkatesh
Abstract: Despite the continuing US hospital merger wave, it remains unclear how mergers change, or fail to change, hospital behavior and performance. We open the “black box” of hospital practices through a mega-merger between two for-profit chains. Benchmarking the merger’s effects against the acquirer’s stated aims, we show they achieved some of their goals, harmonizing electronic medical records and sending managers to target hospitals. Post-acquisition managerial processes were similar across the merged chain. However, these interventions failed to drive detectable gains in performance. Our findings demonstrate the importance of organizations for merger research in health care and the economy more generally.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| merger (G34) | harmonization of electronic medical records (EMRs) (I10) |
| harmonization of electronic medical records (EMRs) (I10) | clinical performance (D29) |
| merger (G34) | clinical performance (D29) |
| merger (G34) | financial performance (G32) |
| merger (G34) | increase in costs per inpatient discharge (H51) |
| merger (G34) | decline in profitability for acquirer's existing hospitals (G34) |
| merger (G34) | disconnect between managerial practices and actual outcomes (L23) |