Capital Expenditures Increased at Rural Hospitals That Merged Between 2012 and 2015.

EXECUTIVE SUMMARY: The number of rural hospital mergers has increased substantially in recent years. A commonly reported reason for merging is to increase access to capital. However, no empirical evidence exists to show whether capital expenditures increased at rural hospitals after a merger. We used a difference-in-differences approach to determine whether total capital expenditures changed at rural hospitals after a merger. The comparison group (rural hospitals that did not merge during the 2012 through 2015 study period) was weighted using inverse probability of treatment weights. The key outcome measure was logged total capital expenditures.Merging resulted in a 26% increase in capital expenditures and also was associated with a significant improvement in plant age. The postmerger improvement in plant age may have been partially attributable to merger-related accounting changes and partially attributable to increased capital expenses, possibly on long-term asset renovations and replacement.These findings suggest that through mergers, rural hospital board members and executives who have accepted or are considering a merger may improve a hospital's ability to increase capital expenditures. Further, increased capital investments in rural hospitals may be an important signal to the community that the acquirer intends to keep the rural hospital open and continue providing some volume and level of services within the community. Future research should determine how capital is spent after a merger.

The Impact of Hospital Acquisition of Physician Practices on Referral Patterns.

Multiple parties influence the choice of facility for hospital-based inpatient and outpatient services. The patient is the central figure, but their choice of facility is guided by their physician and influenced by hospital characteristics. This study estimated changes in referral patterns for inpatient admissions and outpatient diagnostic imaging associated with changes in ownership of three multispecialty clinic systems headquartered in Minneapolis-St. Paul, MN. These clinic systems were acquired by two hospital-owned integrated delivery systems (IDSs) in 2007, increasing the probability that hospital preferences influenced physician guidance on facility choice. We used a longitudinal dataset that allowed us to predict changes in referral patterns, controlling for health plan enrollee, coverage, and clinic system characteristics. The results are an important empirical contribution to the literature examining the impact of hospital ownership on location of service. When this change in ownership forged new relationships, there was a significant reduction in the use of facilities historically selected for inpatient admissions and outpatient imaging and an increase in the use of the acquiring IDS's facilities. These changes were weaker in the IDS acquiring two clinic systems, suggesting that management of multiple acquisitions simultaneously may impact the ability of the IDS to build strong referral relationships.

Should inpatients be adjusted by their complexity and severity for efficiency assessment? Evidence from Portugal.

Hospital efficiency analysis depends largely on the model specifications. This study discusses the importance of the case-mix index (CMI) to homogenize the sample of inpatient discharges. It proposes a new index where they are classified by service, since it is usual to have lack of data to compute the CMI and this can influence the credibility of results. Data from the Portuguese national diagnosis-related group (DRG) database was utilized. Three different approaches are developed in this paper, based on locally convex order-m method as well as on translog functions. The first one correlates the efficiency with different inpatients weighting schemes, by using the Nadaraya-Watson method. The second approach compares different frontiers that have been computed using the different weighting schemes. Finally, by using bootstrap, the paper investigates whether the inclusion of severity/ complexity-related variables in the model statistically modifies the results. It has been shown that, under the Portuguese healthcare framework, if the model is environment corrected (which should include epidemiological and main political/ structural health reforms variables), then the severity adjustment of inpatients is pointless. The employment of an inpatient-weighting scheme, such as the CMI, may introduce significant frontier shift, thus its absence is not recommended in productivity evolution analyzes. The CMI shifts the efficiency frontier, but not the relative position of units against it (the last scenario if exogenous variables are present).

The effect of hospital mergers on long-term sickness absence among hospital employees: a fixed effects multivariate regression analysis using panel data.

BACKGROUND: Hospitals are merging to become more cost-effective. Mergers are often complex and difficult processes with variable outcomes. The aim of this study was to analyze the effect of mergers on long-term sickness absence among hospital employees. METHODS: Long-term sickness absence was analyzed among hospital employees (N = 107 209) in 57 hospitals involved in 23 mergers in Norway between 2000 and 2009. Variation in long-term sickness absence was explained through a fixed effects multivariate regression analysis using panel data with years-since-merger as the independent variable. RESULTS: We found a significant but modest effect of mergers on long-term sickness absence in the year of the merger, and in years 2, 3 and 4; analyzed by gender there was a significant effect for women, also for these years, but only in year 4 for men. However, men are less represented among the hospital workforce; this could explain the lack of significance. CONCLUSIONS: Mergers has a significant effect on employee health that should be taken into consideration when deciding to merge hospitals. This study illustrates the importance of analyzing the effects of mergers over several years and the need for more detailed analyses of merger processes and of the changes that may occur as a result of such mergers.

Merging of three hospitals into one university hospital.

BACKGROUND: The merging of hospitals into health enterprises ensued from the Norwegian hospital reform of 2002. A complex restructuring process lasting from 2007 to 2009 resulted in the merger of three hospitals into the University Hospital of North Norway. MATERIAL AND METHOD: Clinical activities were reorganised into fewer and larger units (divisions) and changed from in-patient to day treatment. Leadership was established across geographic units, and a programme for improving patient care pathways was launched. The experience gained is described by means of activity data from January 2006 to April 2011. RESULTS: The number of patient contacts in the somatic sector was temporarily reduced by 7 % in 2009. The mean waiting period increased from 80 days in 2006 to 108 days in 2010, but fell to 85 days in 2011. In psychiatry and specialised cross-disciplinary addiction therapy, the number of patient contacts increased, and waits were unchanged or shortened. National quality indicators showed unchanged or improved results. The number of scientific publications increased by 62 %. Productivity (DRG points per employee-month) increased from 0.73 to 0.79. The annual financial outcome was improved by NOK 537 million (12 % of the 2006 budget). 81 % of the employees were satisfied with their jobs after the restructuring. INTERPRETATION: We maintained activity and the quality of patient treatment at a high level through the change period, and the hospital's financial position has improved. The methods used do not allow conclusions on possible causal relationships between the change process and the results achieved in core activities.

The urge to merge.

For many stand-alone hospitals, a merger, partnership, or affiliation may be the only option to access scale and remain viable in the nation's emerging new healthcare delivery system. These organizations can consider many options for affiliation, including traditional options such as affiliation with regional academic medical centers, a merger or takeover to become the corporate member of a large system, and acquisition by a for-profit system. Emerging options include mergers for scale and access to capital, private-equity transactions, and arrangements involving insurance vertical integration.

Vertical integration and optimal reimbursement policy.

Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that integrated providers should face higher-powered reimbursement incentives, i.e., less cost-sharing. More generally, we conclude that purchasers of health services (and other services subject to agency problems) should consider the organizational form of their suppliers when choosing a reimbursement mechanism.

Quality of Care Before and After Mergers and Acquisitions of Rural Hospitals.

Importance: Rural hospitals are increasingly merging with other hospitals. The associations of hospital mergers with quality of care need further investigation. Objectives: To examine changes in quality of care for patients at rural hospitals that merged compared with those that remained independent. Design, Setting, and Participants: In this case-control study, mergers at community nonrehabilitation hospitals in Federal Office of Rural Health Policy-eligible zip codes during 2009 to 2016 in 32 states were identified from Irving Levin Associates and the American Hospital Association Annual Survey. Outcomes for inpatient stays for select conditions and elective procedures were derived from the Healthcare Cost and Utilization Project State Inpatient Databases. Difference-in-differences linear probability models were used to assess premerger to postmerger changes in outcomes for patients discharged from merged vs comparison hospitals that remained independent. Data were analyzed from February to December 2020. Exposures: Hospital mergers. Main Outcomes and Measures: The main outcome was in-hospital mortality among patients admitted for acute myocardial infarction (AMI), heart failure, stroke, gastrointestinal hemorrhage, hip fracture, or pneumonia, as well as complications during stays for elective surgeries. Results: A total of 172 merged hospitals and 266 comparison hospitals were analyzed. After matching, baseline patient characteristics were similar for 303 747 medical stays and 175 970 surgical stays at merged hospitals and 461 092 medical stays and 278 070 surgical stays at comparison hospitals. In-hospital mortality among AMI stays decreased from premerger to postmerger at merged hospitals (9.4% to 5.0%) and comparison hospitals (7.9% to 6.3%). Adjusting for patient, hospital, and community characteristics, the decrease in in-hospital mortality among AMI stays 1 year postmerger was 1.755 (95% CI, -2.825 to -0.685) percentage points greater at merged hospitals than at comparison hospitals (P < .001). This finding held up to 4 years postmerger (DID, -2.039 [95% CI, -3.388 to -0.691] percentage points; P = .003). Greater premerger to postmerger decreases in mortality at merged vs comparison hospitals were also observed at 5 years postmerger among stays for heart failure (DID, -0.756 [95% CI, -1.448 to -0.064] percentage points; P = .03), stroke (DID, -1.667 [95% CI, -3.050 to -0.283] percentage points; P = .02), and pneumonia (DID, -0.862 [95% CI, -1.681 to -0.042] percentage points; P = .04). Conclusions and Relevance: These findings suggest that rural hospital mergers were associated with better mortality outcomes for AMI and several other conditions. This finding is important to enhancing rural health care and reducing urban-rural disparities in quality of care.

Hospital mergers and referrals in the United States: patient steering or integrated delivery of care?

Many tertiary care hospitals (acquirers) acquire non-tertiary care hospitals (targets), and some of these mergers lead to a significant increase in referrals from the target to the acquirer. This study examines the hospitals' motives for integration and for increasing referrals using hospital discharge data from the Pittsburgh area. I develop and estimate a model of referral choice based on a reputation mechanism. The results suggest that low- or average-quality acquirers exploit their targets' monopoly power to steer patients to the acquirers. Distinguished acquirers, on the other hand, seem to have motives other than patient steering, including the integrated delivery of care.

Using safety culture results to guide the merger of four general practices in the UK.

BACKGROUND: The rapid merger in a crisis of three GP practices to incorporate the patients from a neighbouring closing surgery, led to the redesign of primary care provision. A deliberate focus on patient safety and staff engagement was maintained throughout this challenging transition to working at scale in an innovative, integrated and collaborative GP model. METHOD: 3 cycles of a staff culture tool (Safety, Communication, Organizational Reliability, Physician & Employee burn-out and Engagement) were performed at intervals of 9-12 months with structured feedback and engagement with staff after each round. The impact of different styles of feedback, the effect of specific interventions, and overall changes in safety climate and culture domains were observed in detail throughout this time period. RESULTS: Strong themes demonstrated were that: there was a general improvement in all culture domains; specific focus on teams that expressed they were struggling created the most effective outcomes; an initial lack of trust of the management structure improved; adapting and tailoring the styles of feedback was most efficacious; and burn-out scores dropped progressively. A unique observation of the rate at which different modalities of safety climate and culture change with time is demonstrated. CONCLUSION: With limited time, resources and energy, especially at times of crisis or change, the rapid and accurate identification of which domains of 'culture' and which teams required the most input at each stage of the journey is invaluable. Using this tool and prioritising patient safety, enables rapid and effective positive change to the culture and shape of expanding practices. It affirms that new models of working at scale in GP can be positively embraced with improvements in safety culture, if this is deliberately focused on and included in the transition process.

Association of Hospitalization and Mortality Among Patients Initiating Dialysis With Hemodialysis Facility Ownership and Acquisitions.

Importance: Mergers and acquisitions among health care institutions are increasingly common, and dialysis markets have undergone several decades of mergers and acquisitions. Objective: To examine the outcomes of hemodialysis facility acquisitions independent of associated changes in market competition resulting from acquisitions. Design, Setting, and Participants: Cohort study using difference-in-differences (DID) analyses to compare changes in health outcomes over time among in-center US dialysis facilities that were acquired by a hemodialysis chain with facilities located nearby but not acquired. Multivariable Cox proportional hazards regression models and negative binomial models with predicted marginal effects were developed to examine health outcomes, controlling for patient, facility, and geographic characteristics. All facility ownership types were examined together and stratified analyses were conducted of facilities that were independently owned and chain owned prior to acquisitions. The study was conducted from January 2001 to September 2015; 174 905 patients starting in-center dialysis in the 3 years before and following dialysis facility acquisitions were included. Data were analyzed from March 2017 to December 2018. Exposures: Acquisition by a hemodialysis chain. Main Outcomes and Measures: Twelve-month hazard of death and hospital days per patient-year were the primary outcomes. Results: Of the 174 905 patients included in the study, 79 705 were women (45.6%), 24 409 (14.0%) were of Hispanic ethnicity, 61 815 (35.3%) were black, 105 272 (60.2%) were white, and 1247 (0.7%) were Native American. Mean (SD) age was 65 (15) years. Before acquisitions, adjusted mortality and hospitalization rates were 10% (95% CI, -16% to -5%) and 2.9 days per patient-year (95% CI, -3.8 to -2.0) lower, respectively, at independently owned facilities that were acquired compared with those that were not acquired, while hospitalization rates were 0.7 days (95% CI, -1.2 to -2.0) lower at chain-owned facilities that were acquired compared with those that were not acquired. In stratified analyses of independently owned facilities, mortality decreases were smaller at acquired (-8.4%; 95% CI, -14% to -25%) vs nonacquired (-20.3%; 95% CI, -25.8% to -14.3%) facilities (DID P < .001). Similarly, hospitalization rates did not change at acquired facilities and decreased by 2.6 days per patient-year (95% CI, -3.6 to -1.7 days) at nonacquired facilities (DID P < .001). Acquisitions were not associated with changes in health outcomes at chain-owned facilities. Slower reductions in mortality and hospitalization rates at independently owned facilities contributed to significant differences in hospitalizations (-2.0 days; 95% CI, -2.5 to -1.6, at nonacquired vs 0.9 days; 95% CI, -1.3 to -0.5, at acquired facilities; DID, P < .001) across all ownership types but not mortality (DID, P = .28) with regard to acquisitions. Conclusions and Relevance: Acquisition of independently owned dialysis facilities by larger dialysis organizations was associated with slower decreases in mortality and hospitalization rates, as nonacquired facilities appeared to experience more rapid improvements in outcomes over time.

The California Competitive Model: How Has It Fared, And What's Next?

California became very successful in controlling rising health care costs by promoting price competition through market-based, managed care policies. However, recent data reveal that the state has not been able sustain its initial success in controlling growth in hospital prices. Two powerful trends emerged in California that eroded the conditions needed to sustain price competition. To ensure timely access to emergency hospital services, government regulators enacted regulations that had the unintended effect of giving hospitals tremendous leverage when contracting with health plans. Also, antitrust authorities allowed hospitals to consolidate into multihospital systems by adding members that were not direct competitors in local markets. The combined effect of these policies and consolidation trends was a substantial reduction in the competitiveness of provider markets in California, which reduced health plans' ability to leverage competitive provider markets and negotiate lower prices and other benefits for their members. Policy makers can and should act to restore competitive conditions.

Access to Care.

More and more community cancer care centers are shifting the model of delivery. In two years, 423 individual clinic treatment sites have closed, 658 oncology practices have been acquired by hospital systems, and 359 practices have struggled financially. These statistics represent an 11.3% increase in the number of community cancer clinic closings and an 8% increase in the number of facility consolidations into hospital settings. Overall, since 2008, 13.8 practices per month have been affected by closings, hospital acquisitions, and corporate mergers.

The effect of hospital acquisitions of physician practices on prices and spending.

During the past decade, U.S. hospitals have acquired a large number of physician practices. For example, from 2007 to 2013, hospitals acquired nearly 10% of the practices in our sample. We find that the prices for the services provided by acquired physicians increase by an average of 14.1% post-acquisition. Nearly half of this increase is attributable to the exploitation of payment rules. Price increases are larger when the acquiring hospital has a larger share of its inpatient market. We find that integration of primary care physicians increases enrollee spending by 4.9%.

Consolidation Trends In California's Health Care System: Impacts On ACA Premiums And Outpatient Visit Prices.

California has heavily concentrated hospital, physician, and health insurance markets, but their current structure and functioning is not well understood. We assessed consolidation trends and performed an analysis of "hot spots"-markets that potentially warrant concern and scrutiny by regulators in terms of both horizontal concentration (such as hospital-hospital mergers) and vertical integration (hospitals' acquisition of physician practices). In 2016, seven counties were high on all six measures used in our hot-spot analysis (four horizontal concentration and two vertical integration measures), and five counties were high on five. The percentage of physicians in practices owned by a hospital increased from about 25 percent in 2010 to more than 40 percent in 2016. The estimated impact of the increase in vertical integration from 2013 to 2016 in highly concentrated hospital markets was found to be associated with a 12 percent increase in Marketplace premiums. For physician outpatient services, the increase in vertical integration was also associated with a 9 percent increase in specialist prices and a 5 percent increase in primary care prices. Legislative proposals, actions by the state's attorney general, and other regulatory changes are suggested.