What the research says about the impacts of hospital consolidation across the United States

When patients in the United States rely on hospitals for care, they are often at their most vulnerable, such as during acute illnesses, when suffering major injuries, or while giving birth. Hospitals also are large employers of significant size and import to their local communities, impacting local economies and labor markets outside of their walls.

In recent decades, hospital mergers and consolidations have been on the rise across the country (opens in a new tab). This leads to more highly concentrated (opens in a new tab) hospital and healthcare markets and reduced competition. Increasingly concentrated hospital markets, resulting from consolidation and other dynamics, have far-reaching impacts on patients and providers, ranging from the types of care they can receive to the wages they earn.

In a recent report from the Washington Center for Equitable Growth, “The consequences of U.S. hospital consolidation on local economies, healthcare providers, and patients,” I explore the current evidence on the causes and effects of hospital consolidation in the United States. To illustrate these impacts of hospital consolidation, the report spotlights three important examples: the impact on rural hospitals and their communities, the impact on nurses’ wages and employment, and the impact on access to (opens in a new tab) and quality of maternity care.

Specifically, the report shows that:

• When hospital mergers result in higher market concentration and decreased competition among healthcare providers, workers and local economies can suffer due to increased prices (opens in a new tab). Rural communities (opens in a new tab) are particularly vulnerable to these effects.
• Healthcare providers, specifically nurses and pharmacy workers (opens in a new tab), are often subject to the negative effects of monopsony power—the power that monopolistic hospitals can exercise in local labor markets with increased market share due to consolidation—resulting in suppressed wages and decreased job mobility.
• Patients’ care options can become limited, resulting in lower quality (opens in a new tab) care or the restricted geographic availability of care. Yet mergers also can result in an influx of financial support, leading to new lines of health services, access to a larger network of healthcare providers, and a wider or newer array of technologies for patients, all of which can, in some cases, improve outcomes. (opens in a new tab)

Much is known about the effects of consolidation on healthcare prices, and there is a growing body of work examining the impacts of hospital consolidation on the U.S. labor market and the quality of care (opens in a new tab). But there remain many questions that are pertinent to evidence-based policy development. In the report, I also recommend areas for further research to inform policy development and help mitigate the harmful impacts of consolidation, including:

• How do mergers and acquisitions deliver on their promises post-merger?
• How do clinicians’ roles change in concentrated markets?
• Which patients are the most vulnerable to the impacts of consolidation?

Some specific questions and areas in need of further exploration that the report poses to researchers, stakeholders, and policymakers are centered on:

• Local economies. As policymakers and academics look further into the consequences of hospital consolidation on local economies across the United States, they can think about them as internal impacts to the hospitals themselves and external impacts to the communities in which they operate. Further research questions for consideration include where and to whom costs are passed in local markets following hospital mergers, how the consequences in terms of economic growth may vary by market demographics, and if there are trends due to location, particularly any interactions with nearby economically homogenous or affluent areas.
• Clinicians. Regarding the clinician-patient relationship and how hospital consolidation can affect it—with a particular eye to the issues of health equity and clinician diversity—researchers should investigate impacts on the continuity of care under ownership changes and the availability of specialists and clinicians of diverse backgrounds. Furthermore, they can investigate the availability of resources and support for clinicians pre- and post-mergers.

• Patients. As it stands, the evidence is not conclusive or consistent regarding the association between hospital mergers and the subsequent quality of care. The quality effects of consolidations differ depending on the role of hospitals in their communities and the measures used to assess that quality, including mortality, readmissions, complications, clinical processes, and patient experiences. To design targeted and effective policies, more evidence is needed on the impacts of hospital consolidation on various demographic populations and disease groups (opens in a new tab), and how those activities may exacerbate or improve disparities.

The Washington Center for Equitable Growth has taken on this topic of decreased competition among hospitals because a healthy healthcare ecosystem is essential for patients and critical to the healthcare workforce and local economies. Given the importance of hospitals, policymakers and researchers must do more to understand the underlying causes of hospital consolidation in the United States and work to mitigate the negative impacts that arise from a lack of competition in hospital markets.

By prioritizing the preservation of competition, the transparency of merger and acquisition activities, and equitable access to care, policymakers and researchers can help create a healthcare system that benefits all stakeholders and improves health outcomes for all patients. When markets maintain a healthy level of competition, the U.S. economy can become more equitable and improve the lives of all Americans.