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February 20, 2019
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David Burda
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Economics Outcomes Policy
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When Hospitals Merge, Patient Satisfaction Gets Squeezed

When two competing companies merge and get bigger, a common worry of their customers is whether the quality of service will suffer as a result. Should patients worry about the quality of service when two competing hospitals merge and get bigger?  Yes, they should be very worried, according to a new study.

Researchers from Rice University and the Baylor College of Medicine, both in Houston, published their study earlier this month in the journal Medicare Care Research and Review. Their findings are further evidence that hospitals are businesses and behave like businesses in any other industry.

The researchers looked at the behaviors of 4,438 hospitals over an eight-year period, from 2008 through 2015. The behaviors were how well the hospitals collectively scored on 10 patient satisfaction measures. The researchers wanted to know how the hospitals’ scores changed on the 10 measures over the study period as hospital market concentration levels rose because of hospital mergers and acquisitions.

The 10 patient satisfaction measures included such things as:

  • The percentage of patients who thought their nurses communicated well
  • The percentage of patients who felt that they received help as soon as they needed it
  • The percentage of patients who said the staff explained their medications to them
  • The percentage of patients who “probably” or “definitely” would recommend the hospital

The researchers found that as hospital market concentration levels went up, patient satisfaction scores went down on all 10 measures.

The researchers also looked for any connection between hospital market concentration levels and 16 process of care measures (like what percentage of patients got recommended preventative antibiotics one hour before surgery) and three readmission measures. The study found “no significant differences” in 18 of those 19 other measures unlike the differences in the 10 patient satisfaction measures, which were “across the board.”

The researchers, who called their findings “striking,” offered this possible explanation for the results: “With fewer competitors it seems that there is less incentive to keep patients content.”

And further: “Given the nature of some satisfaction measures, such as explaining medications and communicating well with patients, overall clinical quality could suffer if patients do not properly understand care recommendations during their hospital stay or post-discharge.”

In essence, hospitals that say they’re merging to better serve patients are doing quite the opposite. Like businesses in other industries, hospitals become less dependent on—and less interested in—customer service as their future financial success becomes more dependent on market share.

Knowing that, “regulators should continue to focus scrutiny on proposed hospital mergers, take steps to maintain competition, and reduce counterproductive barriers to entry,” the researchers said.

Like competition in any other industry, competition in healthcare makes providers, payers and everyone else work harder for patients. Market-based reforms that promote competition are essential in creating a truly patient-centered delivery system.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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