Consolidations and closures: an empirical analysis of exits from the hospital industry

Worth the trip? The effect of hospital clinic closures for patients undergoing scheduled surgery

Recent decades' hospital closures and consolidations have been rationalized with reference to arguments of efficiency and quality returns to scale and scope. However, closures are met with public outcry from patients living in areas affected by such closures if accompanying increases in travel time are not offset by a higher quality of care. It is broadly established that increases in patients' travel time to acute care lower the probability of survival, but in non-acute and scheduled care we lack knowledge about the quality of care that patients living in closure-affected areas receive. In the non-acute setting of scheduled breast cancer surgery, this study examines how hospital clinic closures affect the quality of care that closure-affected patients receive. The effects are identified using closures of breast cancer clinics in Denmark from 2000 to 2011, during which time the number of clinics was more than halved. Using event study designs on population-wide Danish register data from 1996 to 2014, this study examine changes in surgical outcomes for 9790 patients living in municipalities where the nearest clinic has been closed. The results show that closures have reduced the number of hospitalization days and shifted surgical procedures to state-of-the-art breast-conserving techniques without generating adverse health effects and without causing crowding in non-closing clinics. An examination of the mechanisms suggests that added volume returns at non-closing clinics were of less importance than simply reallocating patients to higher-quality clinics. Closures of clinics performing scheduled surgery may be an effective policy instrument if the goal is to reduce variation in the delivery of hospital care. Increased access to state-of-the-art care may counterbalance patients' concerns of losing their local clinic. However, if the clinics to be closed are small compared to non-closing clinics then there is no potential for added economies of scale or scope in non-closing clinics.

Closure of Licensed Pediatric Beds in Health Care Markets Within Illinois

OBJECTIVE

Our objective was to understand the market characteristics related to closures of licensed pediatric hospital beds that may be related to increasing regionalization of pediatric hospital care.

METHODS

We performed a retrospective descriptive analysis of 110 hospitals with licensed pediatric hospital beds from a statewide survey of health care facilities (2012-2017) and administrative data of hospital admissions (2013-2018) in Illinois. We quantified closures of licensed pediatric hospital beds and categorized hospital bed closures by hospital and market characteristics.

RESULTS

From 2012 through 2017, the number of licensed pediatric beds declined from 1706 to 1254 (-26.5%). Over the same time period, annual pediatric inpatient days minimally changed (+1.1%), while annual pediatric inpatient days at hospitals affiliated with the Children's Hospital Association increased (+30.5%). After accounting for re-openings, the 33 hospitals that closed all licensed pediatric beds fit 4 distinct typologies: 1) Hospitals with minimal pediatric volume throughout the study (n = 19); 2) Hospitals that sustained at least 50% of their pediatric volume after closure of licensed pediatric beds (n = 8); 3) Hospitals with low market share in metropolitan areas (n = 5); and 4) Hospital with a decline in pediatric market share, while a nearby hospital saw a corresponding rise in pediatric market share (n = 1).

CONCLUSIONS

In Illinois, licensed pediatric hospital beds declined while pediatrics inpatient days stayed the same over a recent 6-year period. Typologies of closures describe the nuanced dynamics leading to decline of pediatric hospital beds. Understanding these patterns is critical to ensure that children receive quality pediatric-tailored care.

The Role of Organizational Slack in Buffering Financially Distressed Hospitals from Market Exits

EXECUTIVE SUMMARY

Financial distress is a persistent problem in U.S. hospitals, leading them to close at an alarming rate over the past two decades. Given the potential adverse effects of hospital closures on healthcare access and public health, interest is growing in understanding more about the financial health of U.S. hospitals. In this study, we set out to explore the extent to which relevant organizational and environmental factors potentially buffer financially distressed hospitals from closure, and even at the brink of closure, enable some to merge with other hospitals. We tested our hypotheses by first examining how factors such as slack resources, environmental munificence, and environmental complexity affect the likelihood of survival versus closing or merging with other organizations. We then tested how the same factors affect the likelihood of merging relative to closing for financially distressed hospitals that undergo one of these two events. We found that different types of slack resources and environmental forces impact different outcomes. In this article, we discuss the implications of our findings for hospital stakeholders.

If you say so: A mixed-method study of hospital mergers and quality of care

BACKGROUND

Despite a lack of supporting evidence, hospitals continue to merge in pursuit of quality improvements.

PURPOSE

We seek to develop a more thorough understanding of the quality effects of hospital mergers by integrating various theoretical perspectives using a mixed-methods design.

METHODOLOGY

Quantitatively, we tested the quality effect of all consummated hospital mergers in the Netherlands between 2008 and 2014 on 15 quality indicators (with 82 measurements at hospital, department, and disease levels) using a difference-in-difference approach with Bonferroni correction. Qualitatively, we conducted three comparative case studies to examine how hospital executives, managers, and medical professionals perceive the quality impact of hospital mergers.

RESULTS

Our quantitative results reveal few significant effects of hospital mergers on quality of care at all levels. After applying Bonferroni correction, two quality indicators are negatively associated with hospital mergers. However, the qualitative results indicate that hospital staff have positive perceptions of the mergers' quality implications, resulting from scale and shock effects.

CONCLUSION

The perceptions of hospital staff regarding mergers diametrically oppose their measurable effects. However, the operationalization of quality by hospital staff members differs considerably from the way it is quantitatively measured. The positive perceptions of hospital staff toward mergers could further contribute to the institutionalization of mergers as a quality improvement strategy.

PRACTICE IMPLICATIONS

Hospital managers seeking measurable quality improvements should be wary of merging, despite potential positive perceptions toward it within the organization. In case they do decide to merge, mitigating difficulties in the postmerger integration processes seem most pertinent to achieve measurable effects.

Understanding The Relationship Between Medicaid Expansions And Hospital Closures

Decisions by states about whether to expand Medicaid under the Affordable Care Act (ACA) have implications for hospitals' financial health. We hypothesized that Medicaid expansion of eligibility for childless adults prevents hospital closures because increased Medicaid coverage for previously uninsured people reduces uncompensated care expenditures and strengthens hospitals' financial position. We tested this hypothesis using data for the period 2008-16 on hospital closures and financial performance. We found that the ACA's Medicaid expansion was associated with improved hospital financial performance and substantially lower likelihoods of closure, especially in rural markets and counties with large numbers of uninsured adults before Medicaid expansion. Future congressional efforts to reform Medicaid policy should consider the strong relationship between Medicaid coverage levels and the financial viability of hospitals. Our results imply that reverting to pre-ACA eligibility levels would lead to particularly large increases in rural hospital closures. Such closures could lead to reduced access to care and a loss of highly skilled jobs, which could have detrimental impacts on local economies.

Hospital closures had no measurable impact on local hospitalization rates or mortality rates, 2003-11

The Affordable Care Act (ACA) set in motion payment changes that could put pressure on hospital finances and lead some hospitals to close. Understanding the impact of closures on patient care and outcomes is critically important. We identified 195 hospital closures in the United States between 2003 and 2011. We found no significant difference between the change in annual mortality rates for patients living in hospital service areas (HSAs) that experienced one or more closures and the change in rates in matched HSAs without a closure (5.5 percent to 5.2 percent versus 5.4 percent to 5.4 percent, respectively). Nor was there a significant difference in the change in all-cause mortality rates following hospitalization (9.1 percent to 8.2 percent in HSAs with a closure versus 9.0 percent to 8.4 percent in those without a closure). HSAs with a closure had a drop in readmission rates compared to controls (19.4 percent to 18.2 percent versus 18.8 percent to 18.3 percent). Overall, we found no evidence that hospital closures were associated with worse outcomes for patients living in those communities. These findings may offer reassurance to policy makers and clinical leaders concerned about the potential acceleration of hospital closures as a result of health care reform.

Why healthcare providers merge

In many OECD countries, healthcare sectors have become increasingly concentrated as a result of mergers. However, detailed empirical insight into why healthcare providers merge is lacking. Also, we know little about the influence of national healthcare policies on mergers. We fill this gap in the literature by conducting a survey study on mergers among 848 Dutch healthcare executives, of which 35% responded (resulting in a study sample of 239 executives). A total of 65% of the respondents was involved in at least one merger between 2005 and 2012. During this period, Dutch healthcare providers faced a number of policy changes, including increasing competition, more pressure from purchasers, growing financial risks, de-institutionalisation of long-term care and decentralisation of healthcare services to municipalities. Our empirical study shows that healthcare providers predominantly merge to improve the provision of healthcare services and to strengthen their market position. Also efficiency and financial reasons are important drivers of merger activity in healthcare. We find that motives for merger are related to changes in health policies, in particular to the increasing pressure from competitors, insurers and municipalities.

Hospital closure and insights into patient dispersion: the closure of Saint Vincent's Catholic Medical Center in New York City

BACKGROUND

Hospital closures are becoming increasingly common in the United States. Patients who received care at the closing hospitals must travel to different, often farther hospitals for care, and nearby remaining hospitals may have difficulty coping with a sudden influx of patients.

OBJECTIVES

Our objectives are to analyze the dispersion patterns of patients from a closing hospital and to correlate that with distance from the closing hospital for three specific visit types: emergency, inpatient, and ambulatory.

METHODS

In this study, we used data from a health information exchange to track patients from Saint Vincent's Medical Center, a hospital in New York City that closed in 2010, to determine where they received emergency, inpatient, and ambulatory care following the closure.

RESULTS

We found that patients went to the next nearest hospital for their emergency and inpatient care, but ambulatory encounters did not correlate with distance.

DISCUSSION

It is likely that patients followed their ambulatory providers as they transitioned to another hospital system. Additional work should be done to determine predictors of impact on nearby hospitals when another hospital in the community closes in order to better prepare for patient dispersion.

Whose social capital matters? The case of U.S. urban public hospital closures and conversions to private ownership

Prior literature on social capital and health has predominantly focused on health outcomes and individual access to healthcare services. It is not known to what degree, if any, community social capital influences the performance or behaviors of public hospitals, a key source of healthcare for disadvantaged communities in the United States. In this study we developed measures of community bridging social capital - horizontal social networks between heterogeneous groups of similar social position - and linking social capital - vertical networks across the status hierarchy - relevant to public hospitals. We examined associations between social capital, and U.S. urban public hospital closures and conversions to private ownership from 1987 to 2007. We found that higher voting participation was associated with a greater hazard of public hospital closure over time (p < 0.01), whereas the number of business, professional and political organizations per 10,000 residents was associated a greater hazard of conversion (p < 0.05). Additional measures of bridging and linking social capital were not associated with either outcome. Taken together, our findings suggest that, at least historically, horizontal forms of social capital among more privileged groups (e.g., business, professional, and political associations) bear influence on public hospital outcomes. Specific efforts to increase engagement of disadvantaged groups and connect them with decision-makers may be needed to fully realize the potential of linking social capital to influence local healthcare policy promoting social protection.

Institutionalizing HIPAA compliance: organizations and competing logics in U.S. health care

Health care in the United States is highly regulated, yet compliance with regulations is variable. For example, compliance with two rules for securing electronic health information in the 1996 Health Insurance Portability and Accountability Act took longer than expected and was highly uneven across U.S. hospitals. We analyzed 3,321 medium and large hospitals using data from the 2003 Health Information and Management Systems Society Analytics Database. We find that organizational strategies and institutional environments influence hospital compliance, and further that institutional logics moderate the effect of some strategies, indicating the interplay of regulation, institutions, and organizations that contribute to the extensive variation that characterizes the U.S. health care system. Understanding whether and how health care organizations like hospitals respond to new regulation has important implications both for creating desired health care reform and for medical sociologists interested in the changing organizational structure of health care.

Impact of specialization in gynecology and obstetrics departments on pregnant women's choice of maternity institutions

In April 2008, specialization in gynecology and obstetrics departments was introduced in the Sennan area of Osaka prefecture in Japan that aimed at solving the problems of regional provisions of obstetrics services (e.g., shortage of obstetricians, overworking of obstetricians, and provision of specialist maternity services for high-risk pregnancies). Under this specialization, the gynecology and obstetrics departments in two city hospitals were combined and reconstructed into two centers, i.e., the gynecological care center in Kaizuka City Hospital and the prenatal care center in Izumisano City Hospital. This paper investigates to what extent and how this specialization affected pregnant women's choices of the prenatal care center and other maternity institutions. We used birth certificate data of 15,927 newborns from the Sennan area between April 1, 2007 and March 30, 2010, for Before and After Analysis to examine changes in pregnant women's choices of maternity institutions before and after the specialization was instituted. Our results indicated that this specialization scheme was, to some extent, successful on the basis of providing maternity services for high-risk pregnancies at the prenatal care center (i.e., Izumisano City Hospital) and having created a positive effect by pregnant women to other facilities in the nearby area.

Residential segregation and the survival of U.S. urban public hospitals

Residential segregation is associated geographic disparities in access to care, but its impact on local health care policy, including public hospitals, is unknown. We examined the effects of racial residential segregation on U.S. urban public hospital closures from 1987 to 2007, controlling for hospital, market, and policy characteristics. We found that a high level of residential segregation moderated the protective effects of Black population composition, such that a high level of residential segregation, in combination with a high percentage of poor residents, conferred a higher likelihood of hospital closure. More segregated and poorer communities face disadvantages in access to care that may be compounded as a result of instability in the health care safety net. Policy makers should consider the influence of social factors such as residential segregation on the allocation of the safety net resources.

Is emergency department closure resulting in increased distance to the nearest emergency department associated with increased inpatient mortality?

STUDY OBJECTIVE

We seek to determine whether patients living in areas affected by emergency department (ED) closure, with subsequent increased distance to the nearest ED, have a higher risk of inpatient death from time-sensitive conditions.

METHODS

Using the California Office of Statewide Health and Planning Development database, we performed a nonconcurrent cohort study of hospital admissions in California between 1999 and 2009 for patients admitted for acute myocardial infarction, stroke, sepsis and asthma or chronic obstructive pulmonary disease. We used generalized linear mixed-effects models comparing adjusted inpatient mortality for patients experiencing increased distance to the nearest ED versus no change in distance.

RESULTS

Of 785,385 patient admissions, 67,577 (8.6%) experienced an increase in distance to ED care because of an ED closure. The median change for patients experiencing an increase in distance to the nearest ED was only 0.8 miles, with a range of 0.1 to 33.4 miles. Patients with an increase did not have a significantly higher mortality (adjusted odds ratio 1.04; 95% confidence interval 0.99 to 1.09). In subgroups, we also observed no statistically significant differences in adjusted mortality among patients with acute myocardial infarction, stroke, asthma or chronic obstructive pulmonary disease, and sepsis. We did not observe any significant variations in mortality for time-sensitive conditions in sensitivity analyses that incorporated a lag effect of time after change in distance, allowance for a larger affected population, or removal of ST-segment elevation myocardial infarction from the acute myocardial infarction subgroup.

CONCLUSION

In this large population-based sample, less than 10% of the patients experienced an increase in distance to the nearest ED, and of that group, the majority had less than a 1-mile increase. These small increased distances to the nearest ED were not associated with higher inpatient mortality among time-sensitive conditions.

Ownership conversion and closure in the nursing home industry

Ownership conversions and closures in the nursing home literature have largely been treated as separate issues. This paper studies the predictors of nursing home ownership conversions and closure in a common framework after the implementation of the Prospective Payment System in Medicare skilled nursing facilities. The switch in reimbursement regimes impacted facilities with greater exposure to Medicare and lower efficiency. Facilities that faced greater financial difficulty were more likely to be involved in an ownership conversion or closure, but after controlling for other factors the effect of exposure to Medicare is small. Further, factors that predict conversion were found to vary between not-for-profit and for-profit facilities, while factors that predict closure were the same for each ownership type.