The Relationship Between Hospital Affiliation and Patient Welfare

Healthcare is a unique industry due to its importance and the many policies that influence its market dynamics. Policies that have led to low reimbursement rates, low patient volumes, staffing shortages, and strict regulations have led many hospitals, primarily rural ones, to face the potential of closure. Losing a hospital can be damaging for a community as it can greatly reduce access to care, worsen the quality of care, and increase healthcare costs overall. One solution used by hospitals is to affiliate with other provider organizations. These agreements can supply hospitals with additional resources. Affiliation can also rob rural hospitals of their autonomy, which hinders their ability to address the needs of the communities that they serve. Additionally, health systems using hospital affiliation to expand into new markets exhibit horizontal integration, which is monopolistic behavior. The effects of the affiliation trend have been studied more commonly from the hospital’s perspective, as opposed to the patient’s. Thus, this paper investigates how hospital affiliation affects patient welfare. Patient welfare is defined along three axes, cost, access, and quality. A panel regression analysis was used to uncover the result of hospital affiliation on these three categories. The analysis showed that costs increase, access increased, and quality decreased.