Physical restructuring and merger outcomes in Ontario hospitals

Hospitals in public and private healthcare systems frequently undergo mergers despite mixed evidence on their effects on quality and cost. We use confidential health data from Ontario to evaluate the effect of hospital mergers on measures of hospital quality, capacity and financial status. In particular, we investigate the claim that hospital mergers involving physical restructuring are more likely to improve these measures than hospital mergers that are administrative in nature. Our primary analysis finds little evidence of an impact of hospital mergers on quality of care. While neither type of merger has an impact on most measures of financial status, mergers are associated with a reduction in total expenses that is greater when the merger involves physical restructuring (with the caveat that both types of merged hospitals produce fewer inpatient cases post-merger).