Healthcare is a necessity, medical facilities are important to their service areas, and any changes in healthcare delivery may have profound effects on the dependent population. Situations in which a hospital merges with a healthcare system or another hospital exemplify such a change, for mergers and acquisitions (M&As) entail potentially large-scale alterations to the local healthcare market and to the manner in which care is provided.
This study explores the effects of hospital consolidation on patient outcomes and the costs associated with their care. This thesis differs from existing literature because it is the first known study to use hospital-level data from 2010 to 2014 to analyze whether hospital mergers significantly affect healthcare quality and cost.
Information on 2011, 2012, and 2013 hospital M&As was obtained from Irving Levin Associates, and 2010 to 2014 quality and cost panel data were collected from the Centers for Medicare & Medicaid Services’ (CMS) Hospital Compare database from one year prior to the merger to one year after. The quality metrics selected were 30-day mortality and readmission rates for acute myocardial infarction (AMI), heart failure (HF), and pneumonia (PN) and two global Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measures of patient overall hospital rating and likelihood to definitely recommend the hospital. The cost measures comprised median Medicare payment for three Medicare Severity-Diagnosis Related Groups (MS-DRGs) related to AMI, HF, and PN.
Regression results reveal that mortality rates increased and readmission rates decreased for all three conditions consequent a merger over the three-year period centered on the year of the merger for an acquired hospital. Conversely, hospital M&As had no significant effects on the global HCAHPS measures or Medicare payment amounts. These findings suggest the multifaceted impact of mergers on healthcare quality and cost. Even though costs were not shown to have notably increased, patient satisfaction did not show marked improvements either. Additionally, despite decreased readmission rates, death rates rose; it is possible that lower readmission rates are the consequence of higher mortality. It is important, therefore, to consider the potential effects of a hospital merger deal, usually made to prevent financial insolvency, on hospital performance and provision of care.