Nonprofit Hospital Mergers: What can we Learn from Financial Markets?

Antitrust challenges to hospital mergers have become increasingly common. Empirical studies of hospital prices and costs have generally utilized static measures of concentration and accounting data. This study avoids the difficulties that surround such approaches. Instead, this study seeks an answer...

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Bibliographic Details
Published in:International journal of the economics of business 1997-02, Vol.4 (1), p.63-69
Main Author: Danger, Kenneth L.
Format: Article
Language:English
Subjects:
Capital market
Hospitals
Imperfect competition
JEL classification: 111
JEL classification: 111, L31, L44, L13
L13
L31
L44
Mergers
Nonprofit hospital mergers
Nonprofit hospital mergers
Imperfect competition
Profits
Profit
Profits
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Summary:Antitrust challenges to hospital mergers have become increasingly common. Empirical studies of hospital prices and costs have generally utilized static measures of concentration and accounting data. This study avoids the difficulties that surround such approaches. Instead, this study seeks an answer to the question; what can we learn about nonprofit hospital mergers from capital market data? The results indicate that the effects of nonprofit hospital mergers are anti-competitive but also small. They cannot be distinguished from either zero or from the effects of profit-seeking mergers. However the results are precise enough to reject previous findings claiming that nonprofit hospital mergers lead to large price decreases.
ISSN:1357-1516
1466-1829
DOI:10.1080/758532194