When hospitals merge, the discussion usually focuses on costs, efficiency and competition.

But what happens to the people working inside them?

New economic research suggests that hospital mergers can increase physicians’ earnings, although the benefits are far from equally distributed.

Researchers examined 17 hospital mergers in the Netherlands between 2011 and 2018, using administrative data to track changes in medical specialists’ incomes.

They found that mergers increased the earnings of self-employed medical specialists by approximately 3.9%.

For salaried specialists, however, the researchers found no statistically significant change in earnings.

Even among self-employed physicians, the benefits were uneven.

Male physicians, more senior specialists and those who already earned relatively high incomes experienced the largest increases.

How physicians are employed shaped who gained from mergers

Hospital mergers can change the balance of economic power.

When hospitals consolidate, they may gain greater influence over negotiations with insurers, suppliers and other organizations.

But the resulting economic benefits do not necessarily reach everyone working within the hospital.

Self-employed specialists often participate in different contractual and financial arrangements than salaried physicians.

These arrangements can affect how changes in market power translate into individual earnings.

The study suggests that organizational consolidation may therefore increase income inequality even among professionals working in the same industry.

Higher earnings didn’t come with better patient outcomes

The higher earnings weren’t matched by measurable gains for patients.

The researchers also examined hospital expenditures, admissions, physician numbers and patient mortality.

They found reductions in hospital admissions and physician numbers, but no statistically significant changes in overall hospital expenditures or 30-day mortality.

What the study doesn’t show

  • It’s a CEPR discussion paper and hasn’t been peer reviewed yet.
  • It covers 17 hospital mergers in the Netherlands between 2011 and 2018. Contracts between Dutch hospitals and specialists differ from those in many other countries.
  • It uses a difference-in-differences analysis, comparing changes at merging hospitals with changes at a comparison group. Like other observational approaches, it depends on assumptions about what would have happened without the mergers.
  • Mortality is only one measure of quality. No change in 30-day mortality doesn’t mean the mergers had no effect on patients.
  • It doesn’t show that hospital mergers generally raise physicians’ pay. Its strongest finding is the difference between self-employed and salaried specialists.

A merger’s gains go to whoever can capture them

When organizations become larger and more powerful, the benefits of that power depend partly on who is positioned to capture them.

A merger may improve the bargaining position of an organization without improving the economic position of all its employees.

Even within a single profession, contracts can decide who wins.