ABSTRACT
One of the earliest studies of merged hospitals was performed by Treat in 1973. He stated that “the current overriding problems in the delivery of health care are: ( 1 ) how to achieve effectiveness in terms of adequate quantity and quality of service; and (2 ) how to provide that service efficiently (i.e., at least cost) . ” 1 He quoted the National Commission of Community Health Services as saying as early as 1966 that “hospitals and allied facilities should explore every available additional means for improving management, increasing efficiency, and reducing cost. Such means should include systems of joint management and the exploration of the possibility of merging small hospitals. ” 2 Thus, the merging of hospitals was recommended in the 1960s, and research in this area has become prevalent. Treat attempted to compare hospital performance before and after a merger. He cited reasons for merger:
• to improve and expand the services offered by the hospital • to ensure institutional survival • to eliminate unnecessary duplication of facilities • to improve utilization rates • to modernize and expand facilities • to enhance research programs • to obtain economies of scale, synergy, and improved manage
ment3
Treat investigated the period 1956 to 1970. He compared the mean difference of 14 selected indicators of efficiency of merging and nonmerging hospitals. These measures included:
• general factors such as service available and patient admittance patterns
• environmental factors such as area medical facilities and dem ographics
• physical facilities factors such as age and condition of the plant • structural factors such as size and managerial components • financing factors such as utilization of capital and cost and
revenue patterns • process factors such as average length of stay and occupancy rate • education and research factors such as numbers of interns and
residents • outcome factors such as cost per day and case and staff to
patient ratio
Treat’s findings were that mergers tended to reduce efficiency while at the same time increasing effectiveness. Inefficiencies were found in the areas of average cost per case, average cost per day, total expenses, and patient days, while favorable performance was found in the areas of bed quantities, services, and approvals.4 Treat did not study the area of acquisition candidates and the analysis of accounting data to create a model to predict candidates but is one of the early, thorough analyses of merged hospitals and their perfor mance.
