You are the Strategic Planner for ABC Health, a large nonprofit healthcare system in central PA. Congratulations! Your Board of Directors and the Executive Directive are exploring a possible merger with Happy Health, a large competing healthcare system also in central PA. You are tasked with exploring the viability of the merger. Your initial research indicates the following major companies:

 

Company	Pre-Merger Market Share
ABC HealthCare	40%
Happy Valley HealthCare	20%
Blue Valley HealthCare	15%
Coaly Healthcare	15%
Whispering Healthcare	6%
Lions Healthcare	4%

 

Company	Post-Merger Market Share
ABC/Happy Valley Healthcare	60%
Blue Valley HealthCare	15%
Coaly Healthcare	15%
Whispering Healthcare	6%
Lions Healthcare	4%

 

Utilizing the information provided, respond to the following questions: 

1. Define the Herfindahl-Hirschman Index (HHI). What does the HHI tell us? Why is it useful in strategic planning?
2. Calculate the pre-merger HHI (show your work please). What is the score?
3. Calculate the post-merger HHI (Show your work please). What is the score?
4. What does the HHI tell you regarding this market? Explain.
5. Do you see any potential anti-trust challenges with the merger? Explain

Answer rating: 100% (QA)

Here is my analysis of the proposed merger utilizing the HerfindahlHirschman Index HHI 1 The Herfind... View the full answer