Numerous hospitals merged during the 1980s and 1990s in an effort to strengthen their financial positions. A study of hospital mergers during 1983-1988 and 1989-1996 found that the three primary reasons for hospital mergers during both periods were to strengthen financial position, achieve operating efficiencies, and consolidate services.
Restructuring actions implemented during both merger periods included consolidating or merging two or more departments or programs; reducing full-time positions in medical and nonmedical support areas; and reducing full-time positions in administration. However, hospitals that merged during the earlier period frequently used the event of the merger to make radical organizational changes, whereas hospitals merging in the later period placed more emphasis on incremental changes. Earlier mergers, for example, often eliminated excess inpatient capacity through closure of one facility or converting it to a new service line such as psychiatric, long-term care, or rehabilitation services. This continued to be true in the later period for merging hospitals in rural areas but not for those in urban areas.
Hospitals that merged with other hospitals that offered similar services during the later period reduced full-time nursing positions more frequently than comparable mergers in the earlier period (58 vs. 27 percent, respectively), and they did not fill this void with increased use of part-time staffing as occurred in hospitals that merged earlier (29 vs. 60 percent, respectively). Reductions in administrative staff were almost universal, involving about 90 percent of merging hospitals.
These findings are based on a previous survey of hospitals that merged between 1983 and 1988 and a new survey of hospitals that merged between 1989 and 1996. The study was led by Gloria J. Bazzoli, Ph.D., formerly with the American Hospital Association's Health Research and Educational Trust and now with the Department of Health Administration, Virginia Commonwealth University. The study was supported by the Agency for Healthcare Research and Quality (HS09201).
More details are in "Hospital reorganization and restructuring achieved through merger," by Dr. Bazzoli, Anthony LoSasso, Ph.D., Richard Arnould, Ph.D., and Madeleine Shalowitz, M.D., M.B.A., in the winter 2002 Health Care Management Review 27(1), pp. 7-20.