The Corporatization of Independent Hospitals

Elena Andreyeva, Atul Gupta, Catherine Ishitani, Malgorzata Sylwestrzak and Benjamin Ukert

Journal of Political Economy Microeconomics, 2024, vol. 2, issue 3, 602 - 663

Abstract: Little is known about how system ownership affects hospital operations, though they control 80% of hospital beds. We combine multiple data sources, including novel price data from a large commercial insurer, to study over 100 independent hospitals that enter system ownership. The targets obtain differentially higher prices, relative to a matched comparison group, but far greater cost reductions, primarily through reducing labor and financing costs. In contrast, we do not detect operating-cost reductions at 135 system-owned hospitals acquired by other systems, suggesting that these savings are mostly realized on the initial transition to system ownership.

Date: 2024
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