Hospital mergers and acquisitions: does market consolidation harm patients?

Abstract

Debate continues on whether consolidation in health care markets enhances efficiency or instead facilitates market power, possibly damaging quality. We compare the quality of hospital care before and after mergers and acquisitions in California between 1992 and 1995. We analyze inpatient mortality for heart attack and stroke patients, 90-day readmission for heart attack patients, and discharge within 48 h for normal newborn babies. Recent mergers and acquisitions have not had a measurable impact on inpatient mortality, although the associated standard errors are large. Readmission rates and early discharge increased in some cases. The adverse consequences of increased market power on the quality of care require further substantiation.