Hospital mergers and savings for consumers: Exploring new evidence

This study analyzes changes in costs and prices from 1989 to 1997 for 1,767 short-term hospitals, including 204 hospitals involved in mergers; 653 hos pitals that were rivals to these merging hospitals; and 910 nonmerging nonr ival hospitals. We find that merging hospitals generally had lower growth i n costs and prices compared with their rivals and also with nonmerging nonr ival hospitals. We find that the presence and extent of these savings varie d based on market and hospital conditions. However. our findings suggest th at cost and price savings resulting from mergers may be smaller than estima ted in earlier studies, especially through our comparison of merging hospit als with their rivals.