What Do We Know About Hospital Mergers? A Selected Annotated Bibliography

Introduction

The following annotated bibliography summarizes 25 recent publications dealing with hospital mergers. The review is not intended to be exhaustive, but rather to focus on the most important recent articles. Because older work is adequately reviewed in several synthesis articles, we have concentrated mostly on materials published since 1995. The review also focuses principally on research-based publications because these offer the strongest evidence. We have selected only a few representative examples of practitioner-based publications. In general, this type of article offers experiential advice on the merger process often with relatively little scientific foundation.

The articles included in this review were identified through Medline and ABI-INFORM searches. Most of the recent literature comes from the U.S., which is unfortunate because healthcare in the U.S. is sufficiently different from Canada’s that care must be taken in generalizing the results. In particular, while discussions of economies of scale and organizational factors are certainly relevant, the U.S. concern with questions of market share, prices and anti-trust legislation is less immediately transferable to the Canadian situation. Clearly,more research on the Canadian context is to be desired.

We have classified the publications into four broad categories: syntheses of the literature (three articles) impact studies or analyses (10 articles) articles dealing with predictors and motives for mergers (four articles) and publications concerning conditions for success (one book and seven articles.) Note that the classification identifies the main theme in the publication. However, some articles cover a number of other themes in less depth. Publications pertaining to the Canadian situation are marked with an asterisk (*).

Several general observations emerge from this bibliography:

  1. A large proportion of the articles deals with the economic impact of mergers in quantitative terms.Most of these indicate that efficiency gains from mergers are possible but not guaranteed. In particular,mergers are more likely to produce economic benefits when they involve smaller hospitals in the same geographic market.
  2. Several articles discuss the consequences of mergers for market concentration and raise concerns about prices and the problems that arise when patient choice is restricted and they must deal with large powerful organizations.
  3. Despite references to the non-economic benefits of mergers, there appears to be little systematic research on this topic, at least in the literature dealing specifically with mergers. An investigation of the medical care literature on the relationships between size, quality and staffing issues might, however, provide further insight concerning these expected non-economic benefits.
  4. This bibliography focuses on mergers, but they are only the most formal option for improving efficiency, organization and coordination of care. Other options include alliances, and other contractual arrangements, which several of the publications touch on. There is a need for more research that compares the relative benefits and disadvantages of different organizational forms.
  5. Some publications pay attention to two alternative forms of service co-ordination, vertical integration and horizontal integration.Mergers between organizations with similar missions such as hospitals correspond to horizontal integration, but there are many factors that also seem to be stimulating the creation of integrated delivery systems (which are a form of vertical integration.) It is not clear how current mergers will evolve and how they will establish co-ordination with other levels of care. This is another issue that requires further research.
  6. Many publications underline the variability of results following mergers. Even when economic conditions are promising,mergers are often undermined by organizational problems, according to many of the publications reviewed. In particular, problems of governance and difficulties in mobilizing physicians seem very common. This suggests that more understanding of the processes of managing implementation to deal with organizational factors is critical. As noted above, there is extensive practitioner literature that proposes recipes for success but little systematic research on these processes.