More from the Author

• Article | New England Journal of Medicine | January 2, 2020

  Changes in Quality of Care After Hospital Mergers and Acquisitions

  Nancy Dean Beaulieu, Leemore S. Dafny, B. E. Landon, Jesse Dalton, Ifedayo Kuye and J. Michael McWilliams

  Background: The hospital industry has consolidated substantially during the past two decades and at an accelerated pace since 2010. Multiple studies have shown that hospital mergers have led to higher prices for commercially insured patients, but research about effects on quality of care is limited.
  Methods: Using Medicare claims and Hospital Compare data from 2007 through 2016 on 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) and data on hospital mergers and acquisitions occurring from 2009 through 2013, we conducted difference-in-differences analyses comparing changes in the performance of acquired hospitals from the time before acquisition to the time after acquisition with concurrent changes for control hospitals that did not have a change in ownership.
  Results: The study sample included 246 acquired hospitals and 1986 control hospitals. Being acquired was associated with a modest differential decline in performance on the patient-experience measure (adjusted differential change, −0.17 SD; 95% confidence interval [CI], −0.26 to −0.07; P=0.002; the change was analogous to a fall from the 50th to the 41st percentile) and no significant differential change in 30-day readmission rates (−0.10 percentage points; 95% CI, −0.53 to 0.34; P=0.72) or in 30-day mortality (−0.03 percentage points; 95% CI, −0.20 to 0.14; P=0.72). Acquired hospitals had a significant differential improvement in performance on the clinical-process measure (0.22 SD; 95% CI, 0.05 to 0.38; P=0.03), but this could not be attributed conclusively to a change in ownership because differential improvement occurred before acquisition.
  Conclusions: Hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates. Effects on process measures of quality were inconclusive. (Funded by the Agency for Healthcare Research and Quality.)

  Keywords: Hospitals; Mergers and Acquisitions; Health Care and Treatment; Quality;

  Citation:

  Beaulieu, Nancy Dean, Leemore S. Dafny, B. E. Landon, Jesse Dalton, Ifedayo Kuye, and J. Michael McWilliams. "Changes in Quality of Care After Hospital Mergers and Acquisitions." New England Journal of Medicine 382, no. 1 (January 2, 2020): 51–59.  View Details

  CiteView DetailsFind at Harvard Register to Read

  Related

• Case | HBS Case Collection | October 2018 (Revised August 2019)

  Beth Israel Deaconess: Consolidating to Strengthen, or to Stave Off, Competition?

  Leemore Dafny

  In July 2017, CEO Kevin Tabb of Boston's Beth Israel Deaconess Medical Center announced his plan to consolidate 11 Massachusetts hospitals under a common management structure. These hospitals collectively generated $5 billion in patient revenue and 25% of privately-insured hospital stays in the state. The merger would create a credible competitor to Partners Healthcare, the state's dominant health care provider, but would potentially reduce competition and raise prices. State regulators were assessing the merger, and Tabb needed to argue its merits.

  Keywords: Beth Israel Deaconess; Lahey; Partners; health care; Hospitals; payers; providers; anti-trust; health care regulation; Mergers and Acquisitions; Health Care and Treatment; Market Design; Duopoly and Oligopoly; Negotiation; Consolidation; Competition; Health Industry; Massachusetts; Boston;

  Citation:

  Dafny, Leemore. "Beth Israel Deaconess: Consolidating to Strengthen, or to Stave Off, Competition?" Harvard Business School Case 319-026, October 2018. (Revised August 2019.)  View Details

  CiteView DetailsEducators

  Related

• Article | RAND Journal of Economics | Summer 2019

  The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry

  Leemore S. Dafny, Katherine Ho and Robin S. Lee

  We consider the effect of mergers between firms whose products are not viewed as direct substitutes for the same good or service but are bundled by a common intermediary. Focusing on hospital mergers across distinct geographic markets, we show that such combinations can reduce competition among merging hospitals for inclusion in insurers' networks, leading to higher prices (or lower-quality care). Using data on hospital mergers from 1996 to 2012, we find support that this mechanism operates within state boundaries: cross-market, within-state hospital mergers yield price increases of 7%–9% for acquiring hospitals, whereas out-of-state acquisitions do not yield significant increases.

  Keywords: Mergers and Acquisitions; Markets; Geographic Scope; Price; Outcome or Result; Insurance; Health Industry;

  Citation:

  Dafny, Leemore S., Katherine Ho, and Robin S. Lee. "The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry." RAND Journal of Economics 50, no. 2 (Summer 2019): 286–325.  View Details

  CiteView DetailsFind at Harvard Register to Read

  Related