Is Hospital Consolidation Leading to Higher Value?

Abstract

Hospital consolidation is on the rise, driven by the combination of government provisions that aim to move the system from volume to value and the financial impacts of the pandemic. The key argument in favor of consolidation is that larger systems are better positioned to achieve higher value through dissemination of best practices and economies of scale. So, are these systems delivering consistently high value? Our analysis of the CMS Hospital Value-Based Purchasing Total Performance Score (TPS) for two cohorts of health systems — those in the state of California and those top ranked by U.S. News & World Report— suggests that the answer is: it depends. Although in some systems, most hospitals have higher-than-average TPS, all systems show opportunities for improvement. Given that patients often assume within-brand equivalence in healthcare value judgements, hospital systems must assume responsibility for delivering truly consistent and high value healthcare across their entire network.