Invited Commentary
August 2, 2023
Should We Care About Hospital Consolidation?
Christopher P. Childers, Beverley A. Petrie, Christian de Virgilio
JAMA Surg. Published online August 2, 2023. doi:10.1001/jamasurg.2023.3256
Competition among businesses is thought to benefit the consumer. With the recent surge in hospital mergers, there is concern that competition is being stifled and that costs may increase without a concomitant improvement in quality. Using 4 years of Medicare data, Thumma et al1 compared surgical outcomes (30-day mortality and readmission rates) at hospitals in high-competition markets with those in low-competition markets. They focused on high-risk elective surgical procedures, of which nearly 80% were hip or knee replacement. After adjusting for available patient and hospital characteristics, they found mixed results, concluding that hospital market competition was not consistently associated with improved outcomes. These findings suggest that competition may not be the end-all that policy makers hope for when it comes to improving quality.
A few aspects of the study are worth noting. The Herfindahl-Hirschman index (HHI) is a measure of market competition for a geographic region. The study focused on extremes: comparing patients in the highest quintile with those in the lowest quintile. As a result, the definition of low competition required an HHI greater than 8000. This is higher than the 2500 threshold adopted by the Department of Justice (DOJ). 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. Patients in this environment were then compared with those in high-competition markets, defined in this study as an HHI less than 2000. It would be interesting to see whether the analysis would have yielded the same results using DOJ thresholds. Nevertheless, the authors add important literature on a topic that should be of great interest to policy makers.
Should we accept the wave of hospital mergers and assume that healthy competition is unnecessary? Not quite. We need more data on outcomes such as length of stay, oncologic control, and quality of life. And there is a growing body of literature supporting the fact that hospital consolidation does not improve quality and, perhaps more importantly, may increase costs.2-4 When it comes to the value equation, keeping the quality numerator steady while increasing the cost denominator is still a net negative for the health care system. Unfortunately, we may also be too late. Using the aforementioned DOJ cutoff (HHI >2500) for low-competition markets, a recent analysis showed that 90% of US hospitals are now in low-competition markets.5 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.
