The past few decades have seen the growing concentration of hospitals and other health care services in the United States. In 2005, about half of US hospitals were part of a larger system. By 2017, two-thirds were. Most places in the US have what is considered a highly concentrated hospital market, which means one company operates most of the hospital facilities in the area.
This concentration is one of the most significant trends in American health care. It can lead to fewer options for patients and higher prices. Recent research has found that higher hospital prices are driving much of the recent increases in US health care spending. Hospitals that are acquired by larger systems sometimes cut important services, such as maternity care, forcing patients to travel hours to receive medical services they used to be able to get locally.
As I wrote late last year, America’s smaller community hospitals, many of which operate with a deficit, have often been forced to explore mergers with larger health systems to keep the doors open.
Higher costs are bad news for patients. But it’s notoriously difficult to analyze the clinical consequences of these mergers: Does a more concentrated hospital system also lead to worse care? There are many variables in play, and mergers can disrupt the health care market (through those higher prices) in ways that make it difficult to isolate how any changes to a hospital’s operations post-merger have contributed to any increase in deaths or readmissions.
A new study of hospital mergers in the United Kingdom is trying to shed light on that question. It found that after hospitals merge, patients are more likely to die during or soon after a hospital stay and they are also more likely to be readmitted a second time in the near term, according to new research from scholars at Cornell University and the University of London. These increases begin within a few months of the merger and persist for at least two years, the researchers found.
Most UK hospitals are publicly owned, but the national government has still made mergers a priority in order to improve its health system’s performance by merging hospitals that are struggling financially with another hospital. In practice, a UK hospital merger often looks a lot like a US hospital merger does: Separate facilities that once operated under separate management are brought under the purview of one board and one senior leadership team.
The size of the mergers’ impact, especially on mortality, is substantial: The likelihood that a patient will die in the hospital or within 30 days of being discharged increased by 0.4 percentage points, a 27 percent increase from the pre-merger mortality rate of 1.4 percent. They are also 11 percent more likely to be readmitted within 30 days of being discharged from the hospital.
At the 139 hospitals involved in 13 different mergers from 2006 to 2015, this increase in mortality and readmissions translated to 60 additional deaths and 140 readmissions when compared to a large control group of UK hospitals that did not experience a merger over that period.
“Mergers and acquisitions raise a number of antitrust concerns, chief among them that market consolidation may lead to higher prices or poorer product quality,” the authors, the University of London’s Elena Ashtari Tafti and Cornell’s Thomas Hoe, wrote to open their conclusions. “Both of these effects are incredibly important in health care markets, which have experienced significant merger activity over the past two decades, and where prices and quality can literally be a matter of life or death.”
In the US, the evidence on how mergers affect the quality of care is limited and mixed. But the UK and its National Health Service are arguably an ideal setting to study these effects, the authors argue, because payment and the mix of payers do not change as a result of the merger. That removes one variable that can confound similar research in the US. They studied the period from 2006 to 2015 in part because it followed reforms to the NHS that gave patients more choice about where to seek care and put hospitals on a fixed budget for their operations.
Ashtari Tafti and Hoe tout that special feature of the UK health system as a virtue of their research. They also point out that their findings are the logical extension of prior studies that found the quality of care was better in more competitive hospital markets. But they acknowledged more work needs to be done to determine whether the results would be replicated in a different health system with a different payment structure, such as the US.
I asked Hannah Neprash, a health care economist at the University of Minnesota, who did not contribute to the research, whether she thought what the researchers detected in the UK would be applicable in the US. She pointed out that the study sample was fairly small (13 mergers affecting 139 acute care hospitals; for context, the UK control group included about 1,100 hospitals and the US has about 5,000 similar facilities). She also noted some of the specific findings (such as a particularly sizable increase in kidney-related mortality) that demand more scrutiny and explanation, and the researchers cited how specific changes in a hospital’s operations post-merger affected clinical quality should be the subject of future inquiry.
“For me, there’s a lingering question about generalizability, but that isn’t really because of the differences between US and UK hospital stuff,” she said.
Patients in the US already report a worse experience when treated at hospitals that have gone through a merger. This new research suggests that there is also a measurable effect on the more objective quality of care they receive.
The US health system, given its perverse financial incentives, has driven more and more hospitals to merge together in an attempt to stay open, to operate more efficiently, and in theory, to better coordinate services for their patients. Federal regulators have tried to stop those mergers at times, but they face various obstacles and constraints. Hospitals have meanwhile made the case that consolidation does actually benefit patients — with little empirical evidence to contradict them — to justify those mergers to public officials.
But the lingering concern has been that the quality of care could deteriorate if hospitals face less competition. What Ashtari Tafti and Hoe saw in their research indicates those concerns should be taken seriously as regulators review future mergers and acquisitions.
