The Ripple Effects of Hospital Mergers

Over the last two decades, there have been more than 1,000 hospital mergers in the United States, leading researchers to wonder: what is the ripple effect from the mergers when it comes to costs and jobs?

According to the National Bureau of Economic Research, the economic impact isn’t great: when hospitals merge, jobs are cut – not only at hospitals – and health care costs increase.

The study shows that more than 40 percent of hospitals involved in these mergers increased prices by more than 5 percent – without any apparent improvement in quality – and those communities tended to cut more than 200 jobs, likely because of increased premiums. Premiums reflect the cost of care and higher payroll expenses lead employers to cut workers rather than trim wages according to researchers. Subsequently, unemployment rates in those communities rise, especially for those earning between $20,000 and $100,000 a year.