PROVIDER CONSOLIDATION AND POTENTIAL EFFICIENCY GAINS: A REVIEW OF THEORY AND EVIDENCE

After accounting for the fact that acquisitions were more likely to occur in markets where costs were increasing at a slower rate, the authors found that post-acquisition average costs per discharge at acquired hospitals were not significantly different from non-acquired hospitals in the same city.24 Overall, the literature demonstrates inconsistent cost reductions resulting from hospital consolidation. Despite different quasiexperimental research designs, both studies found evidence suggesting that surgical volume at the "home" hospital had a larger impact on outcomes than did volume at other hospitals.44 Thus, it would be incorrect to conclude that simply increasing the volume of procedures would necessarily improve quality unless other factors were also addressed. [...]despite some evidence that volume improves outcomes for a handful of procedures, there remains reason to question this justification for hospital consolidation. [...]much of the existing volume-outcomes literature focuses on a few specific procedures and therefore may not generalize to other procedures or to outcomes from more common services. if the effect is procedurespecific, it is unclear whether a merger across all hospital service lines is necessary or if the same benefit could be achieved through looser contractual arrangements. While practice size is strongly associated with the increased organizational capabilities that may be necessary for quality improvement, the relationship between practice size and outcomes is more complicated. some evidence suggests that group practice yields better outcomes than solo practice does, but the studies also suggested that these quality improvements plateau at a fairly modest group size. [...]while the literature on scale efficiencies provides some support for claims put forth by merging providers, it is unlikely that these modest cost reductions constitute cognizable efficiencies for patients and society that outweigh the clear and substantial contribution consolidation has on the cost of health care.