A hospital corridor
The hospital industry is one of the most important sections in the U.S. economy, both due to its size (accounting for nearly $1.3 trillion in spending) and its impact on the health and wellbeing of the general population. The hospital industry is also everchanging, having undergone tremendous transformation over the past few decades, with nearly 1,600 mergers between 1998 and 2021 and over 500 closures in a similar time period.
While many previous studies reveal that consolidation generally leads to higher prices, a smaller set of studies find ambiguous effects on quality and very few studies examine the effects on access to care. There is an especially heightened concern about the effects on obstetric care.
A recent study published by the National Bureau of Economic Research (NBER) found that of the 317 acquired rural hospitals examined by the study, 40 closed their obstetric departments, many of which were the sole source of obstetric care locally. After obstetric units close, the study suggests that pregnant women may face markedly higher travel costs, receive less prenatal care, less timely obstetric care, more fragmented care or less postnatal care – all of which could result in worse outcomes for mothers and children.
According to the study results, while hospital mergers often result in closures of obstetric units and reductions in local health care resources, there is mixed evidence of the effects on patients.
For example, in counties where a hospital is acquired, the study found that increased use of procedures are suggestive of more resourced care. However, the study also found small increases in maternal morbidity. At the same time, the study reveals that there is no evidence of changes in newborn outcomes overall, though there were improvements in newborn health for Medicaid patients following mergers where obstetrics units did remain open.
The study also highlighted several policies that were significantly associated with health system performance. For both Medicare and Medicaid, having a higher fraction of beneficiaries enrolled in managed care was also associated with better performance.
Additionally, counties in states that expanded Medicaid and/or had lower Medicaid eligibility thresholds relative to the federal poverty line, had higher performance scores. These findings are consistent with research that has shown expanding Medicaid improves health outcomes and quality of care while reducing beneficiaries’ financial strain caused by medical costs and has the potential to decrease overall health care disparities.
Finally, the study found that insurance market concentration, whether for large groups, small groups, or individuals, and market concentration of hospitals were associated with worse health system performance scores. The study found that when an insurance market is highly concentrated it can negatively affect the health care system by leading to higher premiums and prices, as well as fewer choices for patients.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.