The hospital industry is one of the most important sectors of the U.S. economy because of its size and its impact on the health and well-being of the population. While much research has documented the effects of mergers on cost and quality, we know less about the effects of such actions on access to care.

In a new study, researchers examined the impact of hospital mergers on obstetric care in rural areas, where local care options are often sparse. The study found that the acquisition of rural hospitals results in a mix of outcomes for mothers and newborns, sometimes depending on whether the acquisition closes the obstetrics department.

The study, by researchers at Carnegie Mellon University, Northwestern University, and the University of Georgia, appears as an NBER working paper.

“The hospital industry has undergone tremendous transformation over the past few decades, with nearly 1,600 mergers between 1998 and 2021,” explains Martin Gaynor, emeritus professor of economics and public policy at Carnegie Mellon’s Heinz College, who coauthored the study. “Wholesale changes to the health care system, as embodied by the trend in consolidation, can simultaneously affect costs, quality, and access to care.”

To assess the impact of rural hospital acquisitions on access and quality, researchers examined hospital mergers based on information from the American Hospital Association’s Annual Survey of Hospitals and a merger database from a data analysis firm; they measured birth outcomes using county-level data. They identified more than 450 mergers between 2006 and 2019 that involved rural hospitals, 317 of which involved rural hospitals as the target.

Five years after acquisition, rural hospitals were 30% less likely to offer obstetric services, the study found. This corresponded with large declines in the numbers of births at the acquired hospitals and was accompanied by decreases in the quantity of obstetric care resources in the county in which the acquired hospital was located.

As a result, patients had less local access to care, which may explain negative effects on maternal health, such as higher rates of smoking among pregnant women and small increases in maternal morbidity (i.e., disease). But in some cases, these adverse effects were counterbalanced by patients going to higher-quality facilities elsewhere or by improved quality of the local hospital following the merger.

In acquired hospitals that did not close their obstetric departments, the quality of care tended to rise. In addition, although researchers found no evidence of changes in newborn outcomes overall, they did find improvements in newborn health for Medicaid patients.

“Our study suggests that acquisitions are a mixed bag for maternal and newborn health,” says David Dranove, professor of health industry management at Northwestern University’s Kellogg School of Management, who led the study.

“Based on our findings, we suggest that antitrust enforcers who evaluate mergers pay close attention to the effects on patient outcomes,” adds Eilidh Geddes, assistant professor of economics at the University of Georgia’s Terry College of Business, who coauthored the study. “They should not always assume that acquisition-induced closures consistently result in poorer outcomes, especially when acquisitions do not involve closing obstetric units.”