Through pseudo-mergers of healthcare institutions, the following merger effects were analyzed by examining cost changes using ray scale economies-based subadditivity and risk diversification effects. First, regarding cost reduction effects using ray scale economies-based subadditivity, approximately 54% of the 1,035 total merger combinations generated an average operating synergy of -0.67% cost reduction through mergers. Despite the low average cost reduction rate from hospital mergers, the merger market potential in the hospital industry was very substantial, because not all hospitals participate in or become targets of mergers—only those merger combinations showing cost reductions can become merger targets. Therefore, approximately 54% of merger combinations could become merger targets by demonstrating cost reductions through merging. By pseudo-merger type, 27% of merger combinations between large hospitals showed cost reduction effects of 10% or more, making them attractive merger combinations when seeking to expand hospitals to a group level or secure a monopolistic position in the market. Merger combinations between medium-sized hospitals with 150 to 300 beds showed the largest average cost reduction of -6.40%, indicating that substantial cost reduction operating synergies could be achieved when medium hospitals merge to become large hospitals with 300 or more beds. When comparing cost reduction effects based on capital structure, merger combinations between low-debt hospitals showed the greatest cost reduction rates. Such merger combinations are expected to generate financial synergies not only through cost reduction effects but also through increased debt capacity and borrowing ability. Next, approximately 33% of total merger combinations achieved risk reduction through mergers. Based on bed size, the medium-hospital plus medium-hospital merger combination showed the highest cost reduction rate as well as a high risk reduction rate. Based on capital structure, the low-debt hospital plus low-debt hospital merger combination showed the highest rates of both cost reduction and risk reduction. Since the most desirable merger is one where both costs and risks decrease after merging, the medium-hospital plus medium-hospital combination and the low-debt hospital plus low-debt hospital combination are the most desirable merger combinations in terms of these two effects. Such merger combinations have the greatest potential to generate cost reduction synergy effects through changes in scale and output mix, as well as coinsurance synergy effects through risk diversification.