Study casts doubt on link between consolidation and improved care quality

The financial improvement rural hospitals gain by affiliating with healthcare systems may come at a cost to patient care quality.

The high rate of consolidation among healthcare providers has generated a robust argument about whether the practice actually improves financials over the long run.

There’s much less information available about how consolidation affects patients, particularly in rural areas where disparities in access and care quality already present challenges for providers.

A new study published in Health Affairs finds that affiliating does not appear to be improving broad measures of care quality for patients. In fact, there’s evidence that consolidation could potentially hurt access to care.

After affiliating, researchers found significant reductions in the availability of obstetric and primary care services at rural hospitals, as well as sharp declines in the number of outpatient nonemergency visits per year.

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“People have studied consolidation for a long time, and they’ve studied it to death in terms of what it does to healthcare prices and insurance premiums, but there isn’t as much volume of evidence about anything else,” study author Claire O’Hanlon, Ph.D., an adjunct policy researcher at the RAND Corporation, told FierceHealthcare.

Researchers haven’t even reached a consensus about the effects of consolidation on a hospital’s bottom line. “We think that it improves operating margins when you compare it to the hospitals we think are the comparable group while other studies used a different control group and would say that actually, it doesn’t improve the operating margin. So even answering a simple question like that is tremendously complicated,” O’Hanlon said.

While it seems likely that some rural hospitals turn to affiliations as a last-ditch effort to remain open, there’s currently not enough information available to explain why hospitals opt to consolidate.

According to the study, healthcare executives frequently tout potential benefits to care quality from increased knowledge-sharing and a broader pool of resources post-consolidation. The study found that affiliating rural hospitals actually underperformed on patient experience scores compared to their peers, however.

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In addition to policy support that can help rural hospitals remain financially sound without resorting to consolidation, O’Hanlon stresses the importance of considering the potential for new payment policies to inadvertently encourage consolidation. For example, she said facility fees wound up encouraging a lot of hospitals to acquire physician practices to get a bigger cut of indirect costs.

Before policymakers can try more direct efforts to mitigate the potential negative effects consolidation has on care, however, researchers will need to get a better handle on how consolidation actually affects access to care. The current study shows that affiliating hospitals tend to reduce expenses in areas like obstetrics, but whether patients go elsewhere for those services or forego them entirely remains an open question.

“All we know is what happens on-site, and I think it’s likely that translates into reduced access for patients,” O’Hanlon said. “It does seem clear that affiliating with a health system does change the structure of services available, even if it prevents a hospital from closing.”