**1. Introduction**

Reorganization of the U.S healthcare system began in the early 1980s as hospital ownership and affiliation began to move toward health care network conglomerates. Prior to this, there were a large number of freestanding hospitals, both nonprofit and for-profit, which existed independently from other hospitals in the area. The system was such that each hospital functioned without any reliance on – or interactions with – neighboring hospitals. However, by the early 1990's, many of these hospitals had entered into agreements to merge with each other. Additionally, many of these hospitals began to acquire autonomous physician groups to form a health care network conglomerate. This restructuring of the U.S. health care system continued throughout the begin of the 21st century. Much of this was driven by the introduction of new payment models in the Patient Protection and Affordable Care Act in 2010, which only served to further initiate mergers and acquisitions as a way to contend with ongoing payment reform.

These mergers were advantageous for a variety of reasons, but financially they were favorable based on the amount of market overlap between separate institutions. Based on previous research by Brooks and Jones [1], two major factors in increasing the likelihood of a merger were identified: the opportunity to increase efficiency and the opportunity to enhance market power.

The expected outcome of enhancing the market power was to increase profitability. By decreasing the amount of competing facilities, there was an opportunity for each healthcare network or set of hospitals to dictate certain prices for healthcare goods and services. The merger of hospitals tended to make the market power of the combination much greater than that of either hospital independently. This substantive alteration of power also served to change the market structure itself. Subsequently, this remodeling of the structure would then place pressures on other competing firms to engage in merger agreements as well.

Gains in efficiency would be made by incorporating the relative strengths of each independent hospital or physician group into a larger structure. Most often, one member of the merger benefits immediately from management expertise of the other merged affiliate. These increases in efficiency can only be seen when facilities combine their collective operations. The amount of market overlap is somewhat predictive of the amount of increase in efficiency seen with mergers. In those facilities with overlap between served markets, consolidating to decrease duplication of services will likely not only be easy, but also rewarding.

Hospital system mergers are well-established in the available literature. Of those that are reported, three significant mergers in major metropolitan cities are the most well-known and time tested [2]. In Philadelphia, in 1995, the University of Pennsylvania Health System acquired the Presbyterian Hospital, followed shortly thereafter by the Pennsylvania Hospital in 1997. This was part of an overarching goal to form an integrated city-wide academic healthcare system. In Boston, in 1994, Massachusetts General Hospital and the Brigham and Women's Hospital merged to form a new healthcare system: Partners Healthcare. Both institutions were affiliated with Harvard University; the goal was to preserve each distinguished institute's identity and renown while also forming a more inclusive healthcare system. Finally, in New York, in 1998, New York Hospital merged with Presbyterian Hospital to form New York-Presbyterian Hospital. Each institution was affiliated with a separate medical school (Cornell and Columbia, respectively); despite the merger, they have maintained a clinical independence from one another.

With an increasing number of hospital system mergers, a known sequela is the merging of the healthcare educational system. There is a considerable amount of literature reporting the trends in health care market concentration [3], in addition to the impact those trends have on healthcare costs and quality of care (arguably two of the most important factors in the health care system). However, there is a paucity of literature in regard to the outcomes of residency programs when their associated institutions have a merger or acquisition event.

The economics of residencies have been increasingly difficult during recent changes in the healthcare system. Historically, postgraduate medical education has been subsidized through a combination of public (Medicare and Medicaid) and private insurance payments. Teaching hospitals have, however, faced issues with decreasing reimbursements for a variety of reasons. A major difficulty that teaching hospitals encounter is the large amount of patients who are uninsured; some of their unpaid medical bills are financed by the hospital, while some is simply a debt that will never be repaid [4]. Another complex issue is the shifts in what type of reimbursement model is utilized by insurance companies. These issues overall result in a lower amount of total reimbursements, which trickles down to graduate medical education. These overall cost deficiencies put a tremendous amount of pressure on residency programs for collaboration to resolve these financial burdens.

With the ever-changing paradigm of healthcare delivery in the United States, the education of future physicians and surgeons remains a dynamic process. Residency mergers have become more common and will continue to occur more frequently. Establishing best practice to successfully merge residencies is important for seamlessness in training. In this chapter, we will review the available literature regarding reported residency mergers, with a focus on models and guidelines proposed to make an effective residency merger, including strategies to overcome the difficulties that present themselves during the process.
