Rural hospitals see improvements in mortality rates after acquisitions, finds JAMA report

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Hospital merger and acquisition activity is expected to remain robust throughout the year, and a new report in JAMA Network Open sees advantages to this trend.

Rural hospital consolidation in particular has improved mortality rates among various conditions, according to the report.

These conditions – heart failure, acute myocardial infarction (AMI), pneumonia and stroke – saw improved mortality rates compared to facilities that remained independent, the data showed.

Still, there are benefits and drawbacks to consolidation. Given that most rural hospitals are the only acute care hospitals in their respective communities, mergers do not necessarily lead to greater market consolidation, as they tend to do in urban settings. But rural hospital mergers may increase market power through collective negotiation with payers. They also could lead to reductions in service lines.

A potential benefit of mergers for small and isolated rural hospitals is that it may enable access to needed financial resources, clinical expertise and new technologies such as electronic health records. Mergers may also offer opportunities for rural hospitals to join alternative payment models, such as accountable care organizations. That means rural hospitals may be able to provide higher quality care after a merger or acquisition.

WHAT'S THE IMPACT?

The study looked at 172 merged hospitals and 266 comparison hospitals. There was a much greater reduction in inpatient mortality for the four conditions among patients admitted to rural hospitals that merged or were acquired than among patients admitted to rural hospitals that remained independent. 

Although mortality for these conditions declined for all hospitals during the study period, the pre-merger to post-merger reductions at merged hospitals exceeded those at comparison hospitals after adjusting for patient, hospital and community characteristics.

Acute myocardial infarction patients showed significantly improved mortality rates at consolidated hospitals, especially for the first four years, which the study attributes to merged hospitals having more resources and support to adopt defined clinical pathways available for AMI through the transfer of technology, as well as expertise from the larger system.

Improvements in mortality for the other three conditions – heart failure, stroke and pneumonia – didn't occur immediately after mergers but rather three to five years later. This time frame is consistent with research indicating that the adoption of quality improvement approaches is complex, and requires internal diffusion within healthcare organizations before outcomes show improvement.

Merged hospitals achieved greater improvement in mortality outcomes for stays with these conditions than did the comparison hospitals. Heart failure and pneumonia are high-volume conditions in rural areas with aging populations, and ensuring timely initial evaluation and treatment for acute stroke is particularly challenging, the research found. With reduced access to care, rural residents with these conditions are at greater risk of death than their urban counterparts.

Mergers, authors said, can allow partnerships with urban hospitals to facilitate the implementation of clinical pathways and protocols for improving patient outcomes. Through consolidation, rural hospitals can also gain access to capital investment in electronic health records and clinical decision support systems for enhancing technological capabilities.

Plus, sharing staff and expertise as part of the merger can help alleviate workforce shortages and improve the hospital's clinical services.

The findings contrast with prior research that has been conducted regarding urban hospitals, which in general showed a decline in quality following consolidation, if there was a measurable impact at all. 

THE LARGER TREND

In July, an executive order from President Joe Biden cracked down on hospital and health insurance consolidations, which the administration said decreases competition and drives up prices.

"Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market," the order said. "Since 2010, 139 rural hospitals have shuttered, including a high of 19 last year, in the middle of a healthcare crisis. Research shows that hospitals in consolidated markets charge far higher prices than hospitals in markets with several competitors."

The order encouraged the Department of Justice and the Federal Trade Commission to enforce antitrust laws vigorously and "recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge."

Hospitals groups decried the order, saying integration and scale can be beneficial in responding to community needs, particularly during a pandemic.

Consolidation, among hospitals and health systems especially, has seen robust activity in recent years, and this trend will most likely continue, Moody's Investors Service found in April.

Larger health systems will pursue M&A to increase market share and to diversify, in terms of both geography and service lines, Moody's said. Smaller providers, meanwhile, have felt that the COVID-19 pandemic has exacted a toll on their financial performance and will likely pursue M&A to gain access to clinical, strategic and financial resources.

Kaufman Hall released an analysis finding that while the number of hospital and health system mergers and acquisitions saw a sharp decline during the first quarter, the average transaction size soared, with the number of so-called "mega-mergers" increasing as the pandemic has worn on.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com