A recent paper published by the National Bureau of Economic Research (NBER) illuminates the adverse consequences of hospital mergers on public health and the economic landscape. The study, analyzing almost 150 high-concentration hospital mergers in the U.S. from 1996 to 2022, found a disturbing correlation between consolidation and a decline in healthcare quality. Mergers contribute to a reduction in medical providers and competition, subsequently diminishing the incentive for hospitals to maintain or improve patient care standards. This trend is exacerbated by substantial cuts in staffing and funding, leading to lower wages for healthcare workers and an increased patient-to-staff ratio. These factors collectively result in elevated mortality rates, particularly for vulnerable patients, and drive up healthcare costs for both individuals and the broader economy.
Hospital mergers initiate a cascade of negative effects within the healthcare system. The research by Bradley Setzler, an economics professor at Penn State, indicates that these consolidations lead to reduced competition among medical facilities, which in turn decreases the pressure to innovate or sustain high-quality services. This lack of competition often translates into a decline in the overall standard of patient care. Furthermore, mergers are frequently accompanied by significant reductions in both medical personnel and financial resources, leading to a less robust healthcare infrastructure.
Setzler's findings detail a stark reality for healthcare employees: wages for both patient and non-patient care staff decrease by 2% to 4%, while employment levels drop by 9% to 13%. This means that the remaining healthcare professionals are left to manage an increased workload, with the patient-to-staff ratio rising by at least 6%. Such conditions inevitably compromise the quality of care delivered, as an overburdened staff may struggle to provide adequate attention and services to all patients.
The consequences of this diminished quality of care are severe, directly impacting patient outcomes. The study reveals that risk-adjusted mortality rates for patients suffering from conditions like heart failure and pneumonia increase by 0.5 to 0.8 percentage points in merged hospitals, a notable rise compared to the baseline mortality rates of 12% to 13%. Compounding this issue, patients are compelled to pay higher prices for these substandard services, creating a double burden of increased costs and reduced quality.
Setzler emphasizes the broader societal implications of these trends, noting that suppressed wages and inflated prices in the healthcare sector, America's largest industry, significantly harm communities. This creates a vicious cycle where local economies are weakened by fewer employment opportunities, while families and businesses bear the brunt of escalating healthcare expenses, further stressing an already fragile system.
Despite the growing evidence of negative impacts, hospital consolidation in the U.S. has been on an upward trajectory for decades. The American Hospital Association (AHA) argues that mergers can be beneficial, particularly for smaller and rural communities, by enhancing healthcare access through integration into larger hospital networks. They contend that mergers and acquisitions are essential tools for sustaining financially struggling hospitals, reducing costs, improving quality, and better serving patients. However, congressional leaders from both political parties have voiced concerns about the rising healthcare consolidation, particularly its role in driving up costs for both the federal government and patients. The future trajectory of healthcare mergers remains a critical concern, with predictions pointing towards continued increases in prices and a decline in patient care quality, alongside ongoing suppression of wages for healthcare workers, unless significant policy changes are implemented.