Are Hospital Mergers Quietly Costing Lives? The Numbers Are Disturbing

Hospital mergers are bad for Americans’ health, according to a new paper published by the National Bureau of Economic Research (NBER).  

Using data from nearly 150 high-concentration hospital mergers in the U.S. between 1996 and 2022, the paper found that reduced staffing, higher costs, and a lower quality of patient care culminate in increased mortality rates in the local communities where mergers occur. But the strain of this market consolidation isn’t limited to their local communities. 

“When local hospitals merge together, they raise prices, contributing to the high costs of health care in the United States,” said paper author Bradley Setzler, a professor of economics at Penn State.

What Happens When Hospitals Merge?

The paper concluded that hospital mergers generally set off a chain reaction. They reduce the number of medical providers—and competition—within a given market, lowering incentives for improving or maintaining the quality of care. Hospital mergers and acquisitions also come with substantial staffing and funding cuts. 

Setzler’s research found that, within merging hospitals, wages decreased by 2% to 4% across patient care and non-patient care occupations, while employment levels fell by 9% to 13%. Remaining health care workers shouldered these decreases while taking on more work, with the number of hospital staff per patient in merged hospitals declining by at least 6%.  

“These cuts not only harm workers, but also lead to understaffed hospitals that deliver a lower quality of care to patients.” Setzler said.

This lower quality of care ultimately leads to more deaths: The paper found the risk-adjusted all-cause mortality rates for heart failure and pneumonia patients at merged hospitals increased by 0.5-0.8 percentage points, compared to baseline mortality rates of 12% to 13%. Adding insult to injury, patients pay higher prices for this subpar care. 

“Given that health care is America’s largest industry, suppressed wages and inflated prices are expected to substantially harm communities,” said Setzler. “This creates a troubling cycle where reduced employment opportunities weaken local economies while higher health care costs burden both families and businesses.”

The Argument for Hospital Consolidation

Hospital consolidation in the U.S. has trended upward over the last few decades—and the new NBER study isn’t the first to call out its negative effects. But there’s discord within the health care community about whether the pros outweigh the cons. 

In 2023, the American Hospital Association (AHA), which represents nearly 5,000 hospitals, health care systems, networks, and other care providers, argued to Congress that smaller and rural communities benefit from mergers, based on the increase in health care access that comes with being absorbed into a larger hospital network. 

“Mergers and acquisitions are a vital tool to keep financially struggling hospitals open and allow hospitals and health systems to reduce costs, improve quality, and better serve patients where they live,” said Colin Milligan, the senior director of media relations for the AHA.

The Government’s Role

Congressional leaders from both sides of the aisle have sounded the alarm about rising health care consolidation. In a House Budget Committee Hearing in 2024, lawmakers heard about how mergers and vertical integration in the health care industry are driving up costs for the federal government and patients alike.

But President Donald Trump has reversed moves aimed at reducing market concentration.

“While I cannot predict a specific breaking point, the trajectory is concerning,” said Setzler. “If hospitals are permitted to continue consolidating, it is expected to lead to higher prices and worsening care for patients, while continuing to suppress wages and employment opportunities for health care workers.”