We propose to investigate the profitability of the hospital industry in California. Does the industry exhibit scale effects with respect to system size? Does the trend towards consolidation in the hospital market lead to profits for the owners, and higher prices for consumers? We fail to find strong evidence for this but more work is needed to make any definite conclusion.
In 1960, the United States spent 5% of GDP on health care. That grew to 10% by 1985, and 15% by 2003. In 2019, the United States spent 16.9% of GDP on healthcare, the highest share of output in the OECD, and roughly twice the per capita expenditure of the OECD average. $1.2T of the $3.8T expenditure, or about a third, went to hospital care.
With the cost of health care eating up a growing share of economic output, the market behavior of significant actors in the health care industry has drawn increasing criticism. One of these trends has been the consolidation of hospita
