Essay on The Merger of Two Competing Hospitals: A Case Study

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A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate…show more content…
It decided to liquidate after 3 years of red ink.
Hospital B was a not-for-profit organization, located in west side of town. It consists of 154 inpatient beds and a geriatric health center with 100-106 beds, 13 transitional beds and 7 rehabilitation beds. Total staff of 914 employees. It is an old facility and has earmarked $20 million for renovation to existing emergency room and ICU. Appendix 1, Table 1 provides an overview of the two facilities before merger and an overview of PRMC after Merger.

Rational for merger
Merger of Hospital A and B and its consolidation into PRMC was essential as Hospital A was crippled with losses for 3 previous years and was also forecasting losses in the coming year. Hospital B was struggling with an aging facility. Furthermore, given that both the hospitals were in the same community and therefore essentially serving the same community, they were competing both: for the same patients, as well as, the clinical staff. The merger, allowed the new PRMC to reduce the healthcare costs, address the shortage of healthcare personnel and improve the delivery of healthcare by reducing the duplication of services and providing wide variety of services to the small community of 60,000 in southeastern part of Idaho.

Before we begin the process of examining the impact of a merger of two competing hospitals, there are some ….. that we will assume. Some of the assumptions are 1.) There are no

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