Hospital mergers : just what the doctor ordered?

Abstract

Facing a fragile financial situation, the Portuguese governments have been implementing reforms to offset the increasing healthcare costs, which are creating an unsustainable situation for the National Health Service. Attempting to cut expenses in the health sector, a number of fusions between public hospitals were employed. Using data between 2004 and 2011, for thirty National Health Service hospitals, twelve of which are merged, this thesis investigates the existence of fusion effects on the financial performance and on the efficiency of these institutions. The data is analysed using a Differences-in-Differences estimator with Fixed Effects. The treatment effect on the financial performance and on the efficiency is first analysed through two separate equations, based on a translog function, and then through a quantile regression of the same equations. While the literature does not have a strong standing on hospital mergers, it seems to offer more evidence against than in favour of it. The results found by this study go in that direction, as no significant merger effects on either the financial performance or the efficiency of the hospitals were observed.