Do hospital mergers increase hospital efficiency? Evidence from a National Health Service country

Abstract

Objectives: To analyse the effects on technical and cost efficiency of seven hospital mergers over the period 1992–2000 in Norway. The mergers involved 17 hospitals. Methods: First, efficiency scores were generated using Data Envelopment Analysis for 53 merged and non-merged hospitals over the nine years. Second, the effect of mergers was estimated through panel data analysis. Results: In general, the mergers showed no significant effect on technical efficiency and a significant negative effect of 2–2.8% on cost efficiency. However, positive effects on both cost and technical efficiency were found in one merger where more hospitals were involved, and where administration and acute services were centralized. Conclusion: The findings indicate that large mergers involving radical restructuring of the treatment process may improve efficiency as intended, but most mergers do not.