No Quality of Care Benefit from Hospital Acquisitions, Study Finds

January 02, 2020 - Many hospitals and health systems tout the quality of care benefits of merger and acquisition deals. But a new study from researchers at Harvard University found that hospital acquisitions had little impact on key quality of care measures, including hospital readmission and mortality rates.

Published in the New England Journal of Medicine, the study reported on the performance of 246 hospitals that were acquired between 2007 and 2016. Researchers compared performance on four measures of quality of care: a composite of clinical-process measures, a composite of patient-experience measures, mortality, and the rate of readmission after discharge.

The study showed no significant differential change in 30-day readmission rates (-0.10 percentage points) or in 30-day mortality (-0.03 percentage points) two to three years before acquisition compared to three to four years after the hospital changed hands.

Acquired hospitals also experienced little improvement in performance on the clinical-process measure but researchers could not report with confidence that the slight improvement was attributable to the hospital acquisition.

However, researchers could associate worsening patient experience to hospital acquisitions. The study found that performance on the patient experience measure experienced a “modest differential decline” that was analogous to a fall from the 50th to the 41st percentile.

“Taken together, these findings provide no evidence of quality improvement attributable to changes in ownership,” wrote the research team led by Nancy Beaulieu of the Department of Health Care Policy at Harvard Medical School. “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.”

Hospital leaders have used the quality of care benefit to justify or defend mergers and acquisitions. They contend that the deals will lead to increased access to quality care by leveraging economies of scale, providing access to new capital and technology, and more.

However, a growing body of literature is showing that these quality of care benefits do not exist. A study published last month in Health Affairs revealed that acquisitions of rural hospitals between 2009 and 2017 improved financial performance but decreased access to care at the acquired facility.

Other studies have also concluded that hospital acquisitions lead to higher prices for patients. One of those studies recently published in The Quarterly Journal of Economics found hospital market structure to be strongly linked to price levels, with prices at monopoly hospitals being 12 percent higher than those in markets with four or more rivals.

However, hospitals and health systems continue to stand by their merger and acquisition activity, arguing that the deals actually improve care for patients. The American Hospital Association (AHA) released a report in September 2019 touting the benefits of hospital mergers and acquisitions, which included lower costs and statistically significant improvement in outcome measures of quality at acquired hospitals.

“In this era of rapid change within the health care sector, hospitals and health systems remain committed to meeting the needs of all patients,” Rick Pollack, AHA president and CEO, stated at the time. “Mergers have become one of the critical means through which hospitals can provide their communities with high-quality, convenient and cost-effective care. The benefits of mergers allow hospitals to create connected networks of care and keep the focus where it belongs: on improving care for the patient.”

But new findings could spell trouble for this line of thinking, the research team from Harvard stated.

“These findings challenge arguments that hospital consolidation, which is known to increase prices, also improves quality,” they stated in the study.