The Quality Effects of Hospital Mergers

A wave of consolidation swept through the hospital industry in the 1990s. A wave of economic research into the price and cost effects of hospital mergers followed shortly thereafter. Left largely unexplored in the process were the quality effects of hospital mergers. This paper uses quality indicators, compiled using New York state hospital discharge data and algorithms available from the Agency for Healthcare Research and Quality to quantify hospital quality and determine whether mergers have a systematic effect on these measures. Merger effects are identified by comparing merging hospitals to a control group of otherwise similar but non-merging hospitals. The results indicate that, based on most of the quality indicators, mergers have little effect on measured quality. However, both hospitals that merged in 1997 and hospitals that merged in 1998 experience a one-year post-merger increase in congestive heart failure and acute myocardial infarction mortality rates of about 1.2 deaths per 100 admissions. The statistical significance of this result depends on the method used to select the control group.