Hospital Reorganization After Merger

Major organizational changes among hospitals, like system affiliation, merger, and closure, would seem to offer substantial opportunities for hospitals and health systems to be strategic in the local reconfiguration of health services. This report presents the results of a unique survey on what happened to hospitals after mergers occurring between 1983 and 1988, inclusive. Building on an ongoing verification process of the American Hospital Association, surviving institutions from all 74 mergers that occurred during the study frame were surveyed in the fall of 1991. Responses were received from 60 of the 74 mergers (81%), regarding the primary, postmerger use of the hospitals involved. Topics surveyed included the premerger competition between the hospitals and in their environment, and what happened to the hospitals after their mergers. Mergers frequently served to convert acute, inpatient capacity to other functions, with less than half of acquired hospitals continuing acute services after merger. In the context of health care reform, mergers may offer an expeditious way locally to restructure health services. Evidence on the postmerger uses of hospitals and about the reasons given for merger suggests that mergers may reflect two general strategies: elimination of direct acute competitors or expansion of acute care networks.