Study Overview
During the past decade the hospital industry has made profound organizational changes, including the extensive consolidation of hospitals through merger and the formation of hospital systems. Although the rate of hospital system acquisitions may be slowing, the local presence of hospital systems is growing. Locally concentrated systems have been formed by both for-profit and nonprofit hospitals. Researchers have tended to ignore acquisitions or have portrayed system formation as primarily an issue of hospital ownership conversion, thereby focusing on the expansion of national, for-profit systems. This has left a large gap in policymakers’ understanding of how locally concentrated systems may affect patient care and competition.
Study Results
Overall, we find that hospital systems’ acquisitions are declining, but the local presence of hospital systems is growing. Locally concentrated systems are being formed by for-profit as well as nonprofit hospitals. Furthermore, the increased concentration is occurring both in and outside of urban areas. The formation appears to be at least partially a response to managed care.