Low-mortality death in hospitals after vertical integration with Health Maintenance Organizations

Abstract

Objective: Hospital mergers and acquisitions continue to rise due to government and market pressures to join Accountable Care Organizations in order to lower costs. Our study examines the changes in a quality of care measure when hospitals were acquired by Health Maintenance Organizations (HMOs) to analyze the effect that vertical integration has on coordination of care.
Methods: Using California patient discharge data from 2000-2011, our analysis used differences-in-differences and logistic models to test for a change in a quality of care measure before and after hospitals merged with an HMO. We utilized Patient Safety Indicator #2, death rate in low-mortality diagnosis related groups, to measure quality of care.
Results: Hospitals experienced decreases in low-mortality death rates after being acquired by an HMO. This group of hospitals had increasing measures of the quality indicator prior to the merge as well, suggesting selection of well-performing hospitals by HMOs. Hospitals acquired by HMOs also faced increased Type-2 diabetes rates post-merge.
Conclusions: Our results suggest that hospitals merging with a vertically integrated health care system may lead to increases in quality of care. It appears that this could be due to either HMOs providing more coordinated care, or that HMOs acquire hospitals already trending towards better care.