The COVID pandemic has created unprecedented challenges for many American hospitals. Some believe that these challenges will lead to more consolidation among hospitals, potentially leading to higher prices for health care services. Your boss, a Member of Congress, has asked you to write a memo to explain both sides of these issues. Your memo (limited to 250 words) should:
Provide and explain one reason why the pandemic may lead to more hospital consolidation, through either mergers or acquisitions.
Provide and explain one reason why, given what we have learned during the pandemic, such consolidation might improve economic efficiency.
Provide and explain one reason why such consolidation might harm efficiency.
Government agencies often rely on HHI to identify whether to block a hospital merger or acquisition. Suggest a factor (other than HHI) that the government might use to evaluate a merger or acquisitions impact on efficiency.