The Short-Term Effects of Merger on Hospital Operations

Objective. The short-term effect of merger on three areas of hospital operations-scale of activity, personnel/staffing practices, and operating efficiency-is examined. Data Sources. Secondary data obtained from the AHA Annual Surveys (1980-1990) were applied to analyze 92 hospital mergers over the period 1982-1989. Study Design. The study employed a multiple time-series design involving a six-year longitudinal assessment of change in hospital operating characteristics before and after merger, and a parallel analysis of change in a randomly selected group of nonmerging hospitals. Data Collection. Pooled, cross-sectional data files were constructed. Comparisons were evaluated using paired and two-sample t-tests. Principal Findings. General merger effects occurred primarily in areas related to operating efficiency. Merger resulted in slowing rates of preexisting trends, rather than dramatic improvements in operating practices. Conclusions. The short-term impact of merger was generally modest but differed by the conditions under which the merger occurred. Specifically, mergers occurring later in the study period and mergers between similarly sized hospitals displayed greater change in operating characteristics than those occurring earlier in the study period and those between hospitals of dissimilar size. Such differences are attributed respectively to increased competitive pressures after PPS and to greater opportunities for consolidation and efficiencies in mergers involving similarly sized hospitals.