Background:
“The American Hospital Association documents 1,412 hospital mergers from 1998 to 2015, with 561 occurring from 2010 to 2015. Graph above illustrates the number of mergers and the number of hospitals involved in these transactions from 1998 to 2015. A trade publication documents an additional 115 hospital mergers in 2017 and 102 in 2016 and 2017 (Kaufman Hall, 2018). While some of these mergers may have little or no impact on competition, many include mergers between close competitors, especially given that hospital markets are already highly concentrated. Almost half of the hospital mergers occurring from 2010 to 2012 were between hospitals in the same area.
“Further, as indicated below, recent evidence indicates that even mergers between hospitals in different regions may lead to higher prices. As a result of this consolidation, the majority of hospital markets are highly concentrated, and many areas of the country are dominated by one or two large hospital systems with no close competitors. This includes places like Boston (Partners), Cleveland (Cleveland Clinic and University Hospital), Pittsburgh (UPMC), and San Francisco (Sutter). Mergers that eliminate close competitors cause direct harm to competition. In addition, once a firm has obtained a dominant position it often engages in anticompetitive practices in order to maintain it.”
Criteria:
a.) Consider Martin Gaynor’s testimony above and do some investigation on hospital mergers
b.) Critically analyze mergers and draw evidence for the questions
c.) Provide clear, concise and thorough responses to each question!!
Question:
- If hospital mergers are such a problem, and if the Federal Trade Commission and the Department of Justice are tasked with blocking anticompetitive mergers and acquisitions, why have so many hospitals been allowed to merge?
- What are the benefits of hospital mergers from the perspective of the hospitals themselves, the patients, and society?
- Is there any evidence that hospital mergers benefit the hospitals, their patients, or society?
Keywords:
Mergers, Competition, Monopoly, Hospital, Healthcare Market, Market position,
Target Audience:
Business management, Healthcare management, Economists
Paper Format:
1,200 words, Double-spaced, 12-point Times New Roman font, with 1” margins around.
