This study examines hospital consolidation, its role in facilitating the implementation of advanced Electronic Medical Record (EMR) technology, and how these two factors interact to impact hospital average costs. In light of recent public policy proposing EMRs as the solution to rising healthcare costs and an increased rate in consolidation transactions, this study investigates whether consolidation is a strategic move by hospitals to implement the necessary technology to maintain governmental compliance and gain efficiencies. Based on economic theory, there exist costs advantage to consolidation, including scale and scope economies, which reduce hospital average costs. Introduction of advanced EMR systems into hospitals increases the productivity of hospital inputs through time-savings and care coordination. Connecting these two theories, this study hypothesizes that hospitals strategically consolidate in order to lower costs and implement multifunctional EMRs. Due to the standardization required to effectively implement the technology, EMRs are expected to provide greater efficiencies, as revealed through lower average costs in consolidated hospitals than in non-consolidated hospitals.

This study finds evidence of economies of scale as a significant predictor of the likelihood of advanced EMR implementation and lowering hospital average costs. Consolidation was not significant in impacting hospital average costs or consistently significant as a predictor of EMR adoption when excluding an outlier hospital observation. Contrary to expectation, advanced EMRs were found to increase costs in hospitals when estimating the cost function using the original hospital sample, but had no impact when excluding a single outlier hospital.


Burnell, Barbara


Business Economics


Health Economics

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



© Copyright 2015 Rachelle Lee Brenner