Financial performance of merged hospitals in The Netherlands

The literature on the benefits of hospital mergers is very mixed. Despite this, there has been a wave of hospital mergers in The Netherlands, at first supported by the government because of opportunities to realize economies of scale and improve quality. This thesis aims to provide more evidence on the effects of hospital mergers. We will take a closer look at the financial performance of Dutch merged hospitals since 2007. Outcome variables capturing financial performance are solvency, liquidity and rate of return. We will use both a difference-in-difference design and propensity score matching to identify the effects of a hospital merger. Propensity score matching is needed because the parallel trend assumption is questionable. Independent variables to predict the propensity score are HHI of insurance companies, non-medical staff, number of beds, financial result of the hospital, mean provincial income and the share of people aged 65+ in the province. On average, we do not find any significant improvements for the merged hospitals using never merged hospitals as a control group. In the short run, there are some significant improvements in financial performance. In the long run however, these effects disappear. The effects of a hospital merger differ substantially between hospitals.