THE SYNTHESIS PROJECT NEW INSIGHTS FROM RESEARCH RESULTS How has hospital consolidation affected the price and quality of hospital care?

The 1990s witnessed a wave of hospital consolidation, dramatically increasing the number of people living in highly concentrated hospital markets. The balance of evidence shows that consolidation: > Raised hospital prices by at least fi ve percent and perhaps much more. > Produced modest cost savings for merging hospitals. Hospitals merging operations (and not just ownership) experienced the most savings. > Possibly resulted in lower quality. How did the hospital market change in the 1990s? g A wave of hospital mergers and acquisitions in the 1990s transformed the inpatient hospital market. By the mid-1990s hospital merger and acquisition activity was nine times its level at the start of the decade (Figure 1). By 2003, almost ninety percent of people living in the nation's larger MSAs faced highly concentrated markets. Stakeholders and policy-makers have raised concerns about this consolidation trend, pointing to potential impacts on health care costs and quality. This brief analyzes the drivers of consolidation and evidence on how it has affected hospital prices, cost and quality. g The hospital consolidation wave was national in scope, but was most striking in the South. In 2003, as a decade earlier, the South was the most consolidated region with the highest percentage of merging hospitals. The percent rise in consolidation was greatest in the East, however, where the concentration level (HHI) increased 54 percent from 1990 to 2003.