Hospital Mergers and Acquisitions: Does Market Consolidation Harm Patients?
Washington University Olin WP No. OLIN-97-25
Posted: 9 Jun 1998
Date Written: June 1998
Debate continues on whether consolidation in health care markets enhances efficiency and quality or instead facilitates collusion and market power. We address this issue by comparing the quality of patient care in hospitals before and after mergers and acquisitions which occurred in California between 1992 and 1995. We analyze inpatient mortality and length of stay for heart attack and stroke patients, 90-day readmission for heart attack patients, and discharge within 48 hours for normal newborn babies. The analysis indicates that recent mergers and acquisitions have not had a detrimental impact on inpatient mortality. Hospital consolidation has reduced length of stay and increased readmission rates in some cases, but not all. Concerns regarding the adverse consequences of increased market power on patient care require further substantiation.
JEL Classification: I11, I18
Suggested Citation: Suggested Citation