Hospital mergers, acquisitions and regulatory policy implications: Price, cost, access and market power effects

Bhavneet Walia, Christopher John Boudreaux

Research output: Contribution to journalArticle

Abstract

Purpose: The purpose of this paper is to review the literature on hospital mergers and acquisitions (M&As). Design/methodology/approach: The authors conduct a systematic review of the literature on hospital M&As to summarize their effects upon cost of health care delivery (access), efficiency, market power, cost and price. Implications for health care industry policy are provided. Findings: A significant majority of results conclude lower costs, increased efficiency, but higher prices (due to a market concentration effect) following hospital merger or acquisition. These results are consistent with industrial organization theory and suggest that regulatory policy (e.g. price cap regulation) will raise allocative efficiency, consumer surplus and overall market surplus within markets for hospital services. Originality/value: This is the first study to review the price, cost and efficiency effects of M&As with respect to industrial organization theory in the context of hospitals. This study also provides regulatory policy implications.

Original languageEnglish (US)
JournalManagerial Finance
DOIs
StatePublished - Jan 1 2019

Fingerprint

Mergers and acquisitions
Regulatory policy
Costs
Policy implications
Market power
Organization theory
Industrial organization
Industry policy
Consumer surplus
Surplus
Healthcare
Mergers
Hospital services
Allocative efficiency
Market concentration
Systematic review
Health care delivery
Design methodology
Price cap regulation

Keywords

  • Acquisitions
  • Cost
  • Efficiency
  • Hospitals
  • Mergers
  • Prices

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Finance

Cite this

Hospital mergers, acquisitions and regulatory policy implications : Price, cost, access and market power effects. / Walia, Bhavneet; Boudreaux, Christopher John.

In: Managerial Finance, 01.01.2019.

Research output: Contribution to journalArticle

@article{ec9b42376cd74277808293633f01c3b8,
title = "Hospital mergers, acquisitions and regulatory policy implications: Price, cost, access and market power effects",
abstract = "Purpose: The purpose of this paper is to review the literature on hospital mergers and acquisitions (M&As). Design/methodology/approach: The authors conduct a systematic review of the literature on hospital M&As to summarize their effects upon cost of health care delivery (access), efficiency, market power, cost and price. Implications for health care industry policy are provided. Findings: A significant majority of results conclude lower costs, increased efficiency, but higher prices (due to a market concentration effect) following hospital merger or acquisition. These results are consistent with industrial organization theory and suggest that regulatory policy (e.g. price cap regulation) will raise allocative efficiency, consumer surplus and overall market surplus within markets for hospital services. Originality/value: This is the first study to review the price, cost and efficiency effects of M&As with respect to industrial organization theory in the context of hospitals. This study also provides regulatory policy implications.",
keywords = "Acquisitions, Cost, Efficiency, Hospitals, Mergers, Prices",
author = "Bhavneet Walia and Boudreaux, {Christopher John}",
year = "2019",
month = "1",
day = "1",
doi = "10.1108/MF-07-2018-0319",
language = "English (US)",
journal = "Managerial Finance",
issn = "0307-4358",
publisher = "Emerald Group Publishing Ltd.",

}

TY - JOUR

T1 - Hospital mergers, acquisitions and regulatory policy implications

T2 - Price, cost, access and market power effects

AU - Walia, Bhavneet

AU - Boudreaux, Christopher John

PY - 2019/1/1

Y1 - 2019/1/1

N2 - Purpose: The purpose of this paper is to review the literature on hospital mergers and acquisitions (M&As). Design/methodology/approach: The authors conduct a systematic review of the literature on hospital M&As to summarize their effects upon cost of health care delivery (access), efficiency, market power, cost and price. Implications for health care industry policy are provided. Findings: A significant majority of results conclude lower costs, increased efficiency, but higher prices (due to a market concentration effect) following hospital merger or acquisition. These results are consistent with industrial organization theory and suggest that regulatory policy (e.g. price cap regulation) will raise allocative efficiency, consumer surplus and overall market surplus within markets for hospital services. Originality/value: This is the first study to review the price, cost and efficiency effects of M&As with respect to industrial organization theory in the context of hospitals. This study also provides regulatory policy implications.

AB - Purpose: The purpose of this paper is to review the literature on hospital mergers and acquisitions (M&As). Design/methodology/approach: The authors conduct a systematic review of the literature on hospital M&As to summarize their effects upon cost of health care delivery (access), efficiency, market power, cost and price. Implications for health care industry policy are provided. Findings: A significant majority of results conclude lower costs, increased efficiency, but higher prices (due to a market concentration effect) following hospital merger or acquisition. These results are consistent with industrial organization theory and suggest that regulatory policy (e.g. price cap regulation) will raise allocative efficiency, consumer surplus and overall market surplus within markets for hospital services. Originality/value: This is the first study to review the price, cost and efficiency effects of M&As with respect to industrial organization theory in the context of hospitals. This study also provides regulatory policy implications.

KW - Acquisitions

KW - Cost

KW - Efficiency

KW - Hospitals

KW - Mergers

KW - Prices

UR - http://www.scopus.com/inward/record.url?scp=85063565273&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85063565273&partnerID=8YFLogxK

U2 - 10.1108/MF-07-2018-0319

DO - 10.1108/MF-07-2018-0319

M3 - Article

AN - SCOPUS:85063565273

JO - Managerial Finance

JF - Managerial Finance

SN - 0307-4358

ER -