A financial analysis of a hospital merger: Samaritan Health service

This article is based on an evaluation of a hospital merger conducted by the Health Services Research Center of the Hospital Research and Educational Trust and Northwestern University under HEW Contract HSM 110-70-368. The evaluation of Samaritan Health Service (Phoenix, Arizona) concerns many of the crucial dimensions of health care, including management, finances, quality, availability, acceptance, and comprehensiveness, that may have been affected by a hospital merger. The financial analyses are an important aspect of this study, as one of the primary incentives for hospital mergers is apparently the desire to contain costs. The overall research results indicate that this particular merger was successful in containing the cost of hospital care relative to the services provided. The Samaritan study further concludes that substantial cost savings can be realized through hospital mergers. The research results reported in this paper are a summary of the major financial analyses of Samaritan Health Service. The paper demonstrates that, in this particular instance, it can be documented that the cost of hospital care in the merged hospitals was contained relative to average costs in other similar hospitals. The research methods are described and the reported results serve as a case study measuring the financial impact of a hospital merger.