Robert Town, Phoenix Business Journal, Hospital Mergers

Robert Town, Phoenix Business Journal, Hospital Mergers

The 2013 study of hospital merger strategies and pricing impact co-authored by Wharton's Robert Town is the subject of an article in the Phoenix Business Journal.

Town, PhD, is an Associate Professor of Health Care Management at Wharton and an LDI Senior Fellow.

The Arizona newspaper details how Town's study, co-authored with Gautam Gowrisankaran and Aviv Nevo, found that the merger of a region's hospital systems leads to increased prices rather than the cost-saving economies of scale often used to promote the merger. The report comes as the Phoenix-based Banner Health and the University of Arizona Health Network move toward finalizing a merger.

The article notes that some mergers are strategic moves by hospitals to increase their leverage against managed care organizations or health care insurance companies that negotiate prices for their enrollees in a region.

At the same time there has been a rapid increase in the number of hospital systems merging or seeking to merge with each other, there has been a parallel rise in the number of legal actions taken by the Federal Trade Commission to block such mergers under Federal antitrust law.