empirical studies have not uncovered any strong evidence to

empirical studies have not uncovered any strong evidence to indicate that cost savings result from a hospital belonging to a multihosptial system. Yet, hospitals continue to consolidate and form multihospital systems. Why do you suppose that is the case?

Solution

A hospital forming a part of the Multihospital doesn\'t help the hospitals save the cost but it reduces the competition in the market and help the hospitals consolidate the profit.

With less number of hospitals in the market, the existing hospitals will be able to form a monopoly or at least a cartel with other large hospital and set the price of the services high. It will allow them to charge a higher price and face less competition in the market.

So, it is not the cost saving but a higher profit which inspires the hospitals to form a multihospital system.