Hospital markets are increasingly dominated by fewer, larger hospital systems- the result of mergers that have accelerated the concentration of providers and insurers. Such consolidation has been shown to lead to higher commercial health care prices, without corresponding improvements in quality. Furthermore, the effect of hospital mergers on the care of low-income patients, such as people covered by Medicaid, remains largely unknown. 

In a new JAMA Health Forum study, LDI Senior Fellow Eric T. Roberts, NYU Grossman School of Medicine Assistant Professor Sunita Desai, and colleagues looked at whether hospital mergers were associated with changes in obstetric outcomes and the hospitals where pregnant Medicaid enrollees were admitted for labor and delivery. 

Using a difference-in-differences analysis, the team found that hospital mergers were linked to increased travel distances, shifts toward admission to safety-net hospitals and away from hospitals with neonatal intensive care units (NICUs) in urban areas, shifts toward hospitals with NICUs in rural areas, and a small worsening in one obstetric trauma measure.

Desai and Roberts discussed the study and its policy implications below:

What motivated you to do this research on the effect of hospital mergers on pregnant Medicaid enrollees?

Roberts: The theory of how hospital mergers affect care for Medicaid-covered populations is not straightforward. On one hand, higher commercial prices under mergers could bolster hospital resources and support cross-subsidization of traditionally low-margin services where Medicaid is the dominant payer, such as obstetrics and maternity care. However, consolidation could also increase incentives to steer patients toward more profitable lines of business and patient mixes, potentially disadvantaging Medicaid patients. Mergers may also lead hospitals to contract or centralize services, which could reduce access for some groups while concentrating care in higher-capacity facilities better equipped to manage complex cases. Given the theoretical ambiguity about how mergers may affect Medicaid patients, we saw this as an empirical question that needed evidence.

What is your most important finding on the link between hospital mergers and hospital choice and care quality for pregnant Medicaid enrollees?

Desai: Our most important finding is that hospital mergers are associated with changes in where Medicaid patients give birth. In other words, consolidation can shift the hospitals that Medicaid patients use for maternity care, and those shifts appear to differ across market contexts. In particular, in urban markets, where Medicaid patients typically still have multiple hospitals to choose from after a merger, we see a shift in births toward safety-net hospitals. In rural markets, mergers are associated with patients traveling farther to deliver- 22.8 additional miles on average- and shifting toward hospitals with NICUs, suggesting that the remaining options, while farther away, may offer higher-acuity care. This pattern is consistent with prior work showing that rural consolidation often reflects smaller, lower-quality hospitals consolidating or closing, leaving patients to seek care at more capable hospitals that are farther from home.

Has this hospital consolidation work produced new insights?

Roberts:  We think this breaks new ground because the merger literature has largely focused on prices and privately insured patients. By centering on Medicaid patients and examining changes in hospital choice, the study offers a clearer view of how consolidation may affect access and the distribution of safety net care.

At the same time, we did not find evidence that these shifts translated into differences in measured quality of care. Although mergers were associated with meaningful changes in where Medicaid patients delivered, we did not observe corresponding changes in the quality outcomes we examined. One important caveat is that our data come from hospital discharge records, so we could only measure in-hospital outcomes around the delivery stay. We could not observe quality of care or health outside the hospital setting, including prenatal care, postpartum care, or longer-term outcomes.

What are you most excited about with this research on hospital mergers?

Desai: One notable finding was that urban and rural markets do not respond in the same way: in urban markets, births shift toward safety net hospitals, while in rural markets, patients travel farther and shift toward hospitals with NICUs, suggesting consolidation may be narrowing access locally even as it concentrates deliveries in higher-acuity settings. Another notable insight from this study and a related paper is that changes in patient flows to hospitals following mergers stem in part from physician referral patterns: physicians with proportionately larger Medicaid patient panels had larger declines in admissions following hospital mergers. This makes us want to look beyond inpatient care and understand what is happening in outpatient settings, since many hospitals now own extensive outpatient clinic networks. We also would like to see whether patterns we observed for maternity and obstetrical services generalize to other clinical areas.

How did you choose this study design? What limitations should readers be aware of?

Roberts: We spent a lot of time on study design because mergers are not random. The hospitals that merge and the communities that experience mergers differ in meaningful ways, so selection of a valid comparison group is critical. We initially considered a broad set of market areas as controls, but as we dug in, that approach was not credible. We therefore used a matching approach to identify more comparable markets, matching on factors such as pre-merger trends and community and hospital characteristics. Key limitations include limited statistical power in the rural analyses, and that the data are from the pre-Medicaid expansion era. Maternity coverage was not directly affected by Medicaid expansion, but due to spillovers from other service lines and Medicaid subpopulations could cause spillovers. Future research should focus on impacts during the post-Medicaid expansion period.

Given your findings on hospital mergers, what are the key policy implications?

Desai: There are implications for both merger oversight and safety net policy. For regulators reviewing mergers, our findings suggest the need to more explicitly consider impacts on Medicaid patients, especially in communities with high Medicaid enrollment. For safety net financing, the results underscore that hospital market structure matters. In more urban markets, we see evidence consistent with consolidation shifting Medicaid births toward safety net hospitals. As markets become more concentrated, policymakers may need to ensure that safety net systems are adequately supported to meet demand and maintain access. In rural markets where we already face maternity care shortages, policymakers should act to minimize further exacerbation of shortages following hospital mergers.

Where are you going next with the research on hospital mergers?

Roberts: We want to extend this work in three directions. First, we want to study other service lines beyond maternity care to understand whether similar shifts occur in different clinical areas. Second, we want to look more carefully at outpatient settings, where consolidation may change referral patterns and access in ways that are not captured by inpatient data alone. Third, we want to replicate and extend the analysis in the post-Medicaid expansion era to assess whether the dynamics look similar when coverage and payer mix have changed.

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The article “Hospital Mergers, Hospital Choice, and Care Quality for Pregnant Enrollees in Medicaid” appeared in JAMA Health Forum. Authors include: Sunita M. Desai, Prianca Padmanabhan, Sherry Glied, and Eric T. Roberts.

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