New England Journal Study Questions Merits of Hospital Mergers

Published February 25, 2020

The study, “Changes in Quality of Care after Hospital Mergers and Acquisitions,” published January 2, 2020 in the New England Journal of Medicine, triggered a new round of finger-pointing between the payer and provider industries.

“Despite industry claims to the contrary, evidence indicates large hospital mergers not only drive up costs but also do not improve quality of care,” America’s Health Insurance Plans (AHIP), an insurance industry group, said in a statement. 

The study examined 246 hospitals that had been acquired between 2007 and 2016 and a control group of 1986 hospitals that were not acquired. Researchers measured the hospitals’ performance in four areas: mortality, readmission, patient experience, and clinical process. Patient experience refers to interactions patients have with a healthcare system, such as timely access to information and good communication. Clinical process measures healthcare outcomes.

Mergers: A Growing Trend

Mergers and acquisitions among hospitals and healthcare systems have been on the rise in recent years. Citing a 2018 report by the management consulting firm Kaufman Hall, reports there were 90 such deals that year, including several mega-mergers among large regional health systems. AHIP posits that mergers play a key role in driving up costs.

“By no surprise, research has found that when health systems in a region get bigger and squeeze out competition, prices go up for consumers,” AHIP said in a statement last June before a Senate hearing on hospital consolidation.  “That’s just the economic reality.”

Not surprisingly, the hospital industry has a different view. In a statement, the American Hospital Association (AHA) said the study is flawed, arguing it relies on responses from patients to a Centers for Medicare & Medicaid Services Hospital Consumer Assessment of Healthcare Providers and Systems.

Melinda Hatton, AHA’s general counsel, said although the survey could be useful in measuring patient experience, “using data collected from patients making claims about quality fails to recognize that it is often incomplete, as patients are not required to and do not always respond comprehensively.” Hatten stated the survey “does not capture information on the quality of care as it is delivered today.”

Hospital mergers are a symptom of a health care system coping with government meddling, says Devon Herrick, a health care economist and policy advisor to The Heartland Institute, which publishes Health Care News

“Hospitals merge into hospital systems to raise market share and boost negotiating power in order to increase profits,” Herrick said. 


Bonner R. Cohen, Ph.D.([email protected]is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.