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Consolidations and closures: an empirical analysis of exits from the hospital industry
Author(s) -
D. Harrison Teresa
Publication year - 2007
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.1174
Subject(s) - productivity , mergers and acquisitions , market power , economics , business , industrial organization , monetary economics , actuarial science , microeconomics , finance , macroeconomics , monopoly
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.