Consolidation of US Hospitals Leads to Increased Profits but Not Improved Care Quality, Study Finds

December 4, 2023

The consolidation of US hospitals increased between 2000 and 2020, with multi-unit hospital systems now owning 81% of hospital bed capacity, up from 58%. A study of 101 independent hospitals acquired by hospital systems in 20 states found that each hospital’s operating profit rose by about $60,000 per bed annually post-acquisition. A significant part of this increase, approximately $48,000, resulted from reductions in personnel expenses and capital and financing costs. Inpatient revenues increased by around 6% within three years of the acquisition. However, there was no evidence of improved care quality post-acquisition; some data suggested a decline. Specifically, the average 90-day readmission rate rose 3 points for insured cardiac care patients and 0.57 points for patients with non-deferrable conditions under Medicare.

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[Source: National Bureau of Economic Research, December (The Digest: NO. 12), 2023] 

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