Consolidations and closures: an empirical analysis of exits from the hospital industry

Teresa Harrison

Health Economics, 2007, vol. 16, issue 5, 457-474

Abstract: This paper investigates the pre‐exit characteristics of hospital mergers, acquisitions, and closures. We estimate competing risk hazard models using an 18‐year national data set that spans the wave of closures in the 1980s and of mergers in the 1990s. Evidence shows that weak productivity of the hospital is a strong determinant for closures while competitive pressures are more influential in the decision to consolidate. Thus, increased market power, relative to cost reductions, appears to play a larger role in the merger decision. Our results also provide insight into possible correlations between mergers and closures. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:16:y:2007:i:5:p:457-474

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