Hospital Mergers Can Hold Down Wage Growth for Some Health Care Workers - New Research Insights

Investigations into hospital mergers have focused on whether mergers lead to anticompetitive behavior that may limit patient access to care or raise prices for services. The Federal Trade Commission, Department of Justice, Congress, and other experts have recently expressed interest in whether the mergers may also hold down employee wages.

A new study by Elena Prager, PhD, from Northwestern University and Matt Schmitt, PhD, from the University of California Los Angeles, is the first to look at the labor market impact of hospital mergers. The researchers found:

• Mergers that significantly increased hospital concentration in the local labor market slowed wage growth for workers whose employment prospects were closely linked to hospitals.
• Over the four years after these high-impact mergers, nominal wages were 4 percent lower for skilled workers and 6.8 percent lower for nurses and pharmacy workers than they would have been absent the merger.
• Nurse unionization rates and absence of state right-to-work laws, both indicators of greater wage negotiating power for workers, mitigate the effect of hospital mergers indepressing nurse wage growth.

Overall, the findings support the idea that merging hospitals can gain labor market power over some categories of workers and suggest that labor market considerations may be a warranted addition to the antitrust merger review criteria used to identify mergers with potentially detrimental impacts.

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