Effects of hospital mergers (2007-2014) on price and volume

Hospitals: relative price increases, no changes in volume after merger.

In this study, the Netherlands Authority for Consumers and Markets (ACM) has looked into the effects of hospital mergers on price and volume after the mergers have been completed. The objective of the study is to learn from the effects of mergers.

ACM has studied the price and volume effects of 12 hospital mergers based on claims data from 62 of the 65 patient groups defined according to the medical criteria by the Dutch Healthcare Authority (NZa). The 62 patient groups account for over 99% of the hospital turnover generated among patient groups.  The study covers the period of 2007-2014.

The most important finding is an indication of a rise in prices of health care provided by merged hospitals compared with the prices of health care provided by non-merged hospitals. There are only very limited indications of a systematic difference in the development of volumes of merged hospitals as compared to non-merged hospitals. In the vast majority of patient groups, there is a rise in turnover after the merger compared with the development of turnover in the control group of non-merged hospitals. The results are in line with previous empirical studies into the price and volume effects of hospital mergers.

On the basis of the current study and the study into the quality effects of hospital mergers, no final judgement can be given as to whether there has been adequate oversight of hospital mergers. Price increases were found in most patient groups, but there were no demonstrable quality gains. On average, therefore, the investigated hospital mergers lead to higher care costs without a demonstrable relative improvement in quality.