Recent study data suggest hospitals in more competitive healthcare markets do not demonstrate clear post-surgery outcome improvements across several high-risk procedures—a thorn in the side of those advocating for policies limiting hospital consolidation on the grounds of reduced care quality.
Published earlier this month in JAMA Surgery by the University of Michigan researchers, the analysis reviewed 30-day postoperative mortality and readmission measures for more than 2.2 million Medicare beneficiaries whose claims were recorded between 2015 and 2018.
Comparing these outcomes between high- and low-competition hospitals—as determined using the Herfindahl-Hirschman index (HHI) adopted by market regulators—showed that market competition “was not consistently associated with improved outcomes after high-risk surgery,” the researchers wrote.
Specifically, high-competition hospitals’ 30-day mortality measures were higher for two of the 10 measured procedures but lower for three and similar for five. Thirty-day readmission rates at high-competition hospitals were higher for five procedures, but lower for two and no different for three, according to the study.
“Our findings challenge the common assumption that hospital competition may be good for care as it relates to complex surgical procedures,” researchers wrote in the journal.
“Because there was no clear association between hospital competition and improved outcomes, policymakers may not rely on hospital competition as a rationale for trying to improve care, especially as it pertains to surgical care,” they wrote.
The authors also found that hospitals in high-competition markets tended to care for older beneficiaries than those in low-competition markets. Their patients more frequently had comorbidities, were dually eligible for Medicare and Medicaid and more often identified as racial and ethnic minorities.
As for the hospitals themselves, high-competition facilities had more beds, were more frequently teaching hospitals and more likely to be nonprofits, according to the study.
The researchers noted that “while the exact mechanism underlying these [surgical outcome] findings is not clear,” the characteristic findings offer a couple of potential explanations. The high-competition hospitals “may be a destination site” where patients with more comorbidities travel further for care. Alternatively, the high-competition markets may have a lower threshold for offering risky surgical procedures than their low-competition peers.
Additionally, in an accompanying invited editorial, physician researchers from the University of Texas MD Anderson Cancer Center and Harbor-UCLA Medical Center noted that the study’s chosen 8,000 HHI cutoff gauging hospital market competition far outstripped the 2,500 threshold adopted by the Department of Justice.
“For perspective, to reach a value higher than 8000, a given metropolitan area would need to have only 1 hospital (or hospital system) control more than 90% of the market share,” they wrote in the commentary. “…It would be interesting to see whether the analysis would have yielded the same results using Department of Justice (DOJ) thresholds. Nevertheless, the authors add important literature on a topic that should be of great interest to policymakers.”
The authors wrote that their multi-procedure findings flesh out other studies describing mixed surgical quality outcomes as related to hospital competition but noted that additional investigation is still needed.
The editorial authors, meanwhile, were more hesitant to paint recent literature as ambivalent on market competition. They highlighted “a growing body of literature supporting the fact that hospital consolidation does not improve quality and, perhaps more importantly, may increase costs”—a potential issue for the industry when 90% of the nation’s hospitals are located in markets that meet the DOJ’s thresholds for low competition.
“In this new normal, efforts moving forward should focus on the steps available to increase quality and reduce cost in the absence of hospital competition,” they wrote.
Both the Biden administration and lawmakers have increased their scrutiny of deals and policies leading to greater provider consolidation. The latter group sought stakeholder input as it mulls potential adjustments to regulatory legislation and has so far heard arguments supporting both sides of the issue: that consolidation deals can help certain providers stay afloat during tough economic times, and that the deals impose “significant harm on markets” with no added benefits for patients.
Of note, public announcements of health system mergers released by the joining parties often highlight quality and access improvements patients should expect to see following a deal, which the organizations generally attribute to increased resources and shared clinical expertise.
Lobbying groups representing different corners of the industry have also sparred on the topic. Earlier this month, Elevance Health published a report outlining increased negotiated prices among hospitals scooped up by larger systems. The findings were quickly contested by the American Hospital Association CEO Rick Pollack, who said the “biased” report failed to recognize the impact acquisitions have on preserving access at failing facilities.