TY  - JOUR
AU  - Craig, Stuart
AU  - Grennan, Matthew
AU  - Swanson, Ashley
TI  - Mergers and Marginal Costs: New Evidence on Hospital Buyer Power
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 24926
PY  - 2018
Y2  - August 2018
DO  - 10.3386/w24926
UR  - http://www.nber.org/papers/w24926
L1  - http://www.nber.org/papers/w24926.pdf
N1  - Author contact info:
Stuart V. Craig
The Wharton School 
The University of Pennsylvania 
3641 Locust Walk
Philadelphia, PA 19104
Tel: 6366753542
E-Mail: stuart.v.craig@gmail.com

Matthew Grennan
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
Tel: 612/750-0761
E-Mail: grennan@wharton.upenn.edu

Ashley Swanson
Graduate School of Business
Columbia University
3022 Broadway, Uris Hall 621
New York, NY 10027
E-Mail: ats2180@gsb.columbia.edu
M2  - featured in NBER digest on 2018-10-09
AB  - We estimate the effects of horizontal mergers on marginal cost efficiencies – an ubiquitous merger justification – using data containing supply purchase orders from a large sample of US hospitals 2009-2015. The data provide a level of detail that has been difficult to observe previously, and a variety of product categories that allows us to examine economic mechanisms underlying “buyer power.” We find that merger target hospitals save on average $176 thousand (or 1.5 percent) annually, driven by geographically local efficiencies in price negotiations for high-tech “physician preference items.” We find only mixed evidence on savings by acquirers.
ER  -