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Hospitals Say Mergers Help Patients and Save Money—New Evidence Says Otherwise

January 2, 2020, 10:30 PM UTC

Hospitals have claimed that widespread consolidation in the industry benefits both the quality of patient care and makes a dent in health care costs, but a new study published in the New England Journal of Medicine (NEJM) throws cold water on that assertion. Researchers found that hospital mergers may be associated with slightly worse care quality, and noted this deterioration has happened as other studies show that overall hospital costs have risen.

The researchers from Harvard’s business and medical schools, as well as experts from Beth Israel Deaconess Medical Center and the Brigham and Women’s Hospital, used medical claims data to assess factors such as patient satisfaction, readmissions to a hospital, and mortality rates in order to analyze the effects of hospital mergers between 2009 and 2013 on broader public health.

“Hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates,” the study concluded.

That’s a far cry from what industry executives have used to justify consolidation in the sector. In the past two years, hospital giants such as LifePoint, Atrium Health, and others have pursued large-scale M&As that would ostensibly provide both financial and professional synergies to achieve that ever-elusive goal of improving health outcomes while lowering costs. In 2018, the last year for which comprehensive data is available, the average size of a hospital merger deal ballooned to a high of $408 million, according to KaufmanHall. The size of these deals has grown nearly 14% by certain key metrics over the past decade, underscoring how profitable they are for the industry.

The return for patients hasn’t been nearly as lucrative.

“Our findings corroborate and expand on previous research on hospital mergers and acquisitions in the 1990s and early 2000s and are consistent with a recent finding that increased concentration of the hospital market has been associated with worsening patient experiences,” wrote the researchers, noting modest deterioration in patient satisfaction scores and negligible differences in metrics such as the need to be readmitted to a hospital.

Study authors, in the report and on social media, referenced widespread research showing that hospital costs have only gone up in an age of consolidation. For instance, one 2018 report by University of California, Berkeley researchers found that hospital mergers in the Golden State were linked to a more than 10% increase in individual market insurance premiums, a 9% spike in specialty health care services, and a 5% hike in primary care services between 2010 and 2016.

“To sum up: there is no systematic evidence that acquired hospitals improve in quality. There is plenty of evidence that acquired hospitals raise prices. The reorganization of our hospital landscape, is not, on average, helping consumers,” said Harvard economist and study co-author Leemore Dafny in a tweet.

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