Accounting for Complementarities in Hospital Mergers: is a Substitute Needed for Current Approaches?

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Hospitals mergers are common and increasingly frequent occurrences in the United States. Between 2010 and 2015, there were an average of 93 hospital mergers announced per year, substantially more than the annual average of 58 between 2004 and 2009. 1 Policymakers have challenged several recent pro- posed mergers with the concern that they would lead to a loss of competition, by increasing prices and/or reducing quality. 2 Such concerns are consistent with certain theoretical economic models, which predict that mergers between close competitors increase prices. 3 and with empirical evidence on some hospital mergers.