Paper Number
ICIS2025-2644
Paper Type
Complete
Abstract
The rise in U.S. hospital closures has significantly reduced access to healthcare services, particularly in rural areas. To avoid closure, financially distressed hospitals pursue mergers and acquisitions (M&A). However, M&A does not always ensure survival. Some acquirers preserve struggling hospitals, while others close them. This study investigates the factors influencing hospital survival following M&A, emphasizing the moderating roles of rural versus urban location and digitalization levels. Using data from U.S. hospitals between 2008 and 2017, we find that M&A generally reduced hospital closures, but the outcomes were contingent on the hypothesized moderators. M&A decreased closures among urban hospitals but increased closures among rural hospitals. Higher digitalization levels were associated with increased closure rates post-M&A. Target hospital’s high digitalization level creates major integration challenges, costs for the acquirer, and increases the target’s closure risk post-M&A. Hospital executives and policymakers can build on these insights to design strategies for minimizing hospital closures.
Recommended Citation
Tanriverdi, Hüseyin; Yang, Xiaoxuan (Stephen); and Chakravarti, Urjani, "The Effects of Mergers and Acquisitions on Survival of Target Hospitals in the United States: The Roles of Urban-Rural Location and Digitalization" (2025). ICIS 2025 Proceedings. 18.
https://aisel.aisnet.org/icis2025/is_health/ishealthcare/18
The Effects of Mergers and Acquisitions on Survival of Target Hospitals in the United States: The Roles of Urban-Rural Location and Digitalization
The rise in U.S. hospital closures has significantly reduced access to healthcare services, particularly in rural areas. To avoid closure, financially distressed hospitals pursue mergers and acquisitions (M&A). However, M&A does not always ensure survival. Some acquirers preserve struggling hospitals, while others close them. This study investigates the factors influencing hospital survival following M&A, emphasizing the moderating roles of rural versus urban location and digitalization levels. Using data from U.S. hospitals between 2008 and 2017, we find that M&A generally reduced hospital closures, but the outcomes were contingent on the hypothesized moderators. M&A decreased closures among urban hospitals but increased closures among rural hospitals. Higher digitalization levels were associated with increased closure rates post-M&A. Target hospital’s high digitalization level creates major integration challenges, costs for the acquirer, and increases the target’s closure risk post-M&A. Hospital executives and policymakers can build on these insights to design strategies for minimizing hospital closures.
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Comments
21-Healthcare