Growth of hospital affiliations in California: impact on hospital charges and quality

Background: The increasing trend of hospital affiliations raises significant questions about the factors that drive these decisions and their implications for hospital performance, particularly in terms of pricing and quality. This study contributes important insights into how affiliations—a less formal consolidation than full mergers—affect hospital performance. This study aims to assess the effects of hospital affiliations on the discharge charges and quality of care provided by affiliated hospitals. Methods: The study analyzed data from 161 non-profit, non-teaching hospitals in California over the period from 2012 to 2021. Charge data was sourced from the California Department of Health Care Access and Information, and quality data was obtained from the Hospital Compare database managed by the Centers for Medicare and Medicaid Services. A difference-in-differences regression and event study models were employed to evaluate the impacts of hospital affiliations. Results: The number of hospital affiliates in California increased from 8 to 33 between 2012 and 2021. Out of the 33 affiliates, 22 were non-profit and the ones that affiliated during the study period experienced an 8.1% [P=0.04; 95% confidence interval (CI): 0.6% to 16.2%] increase in charges relative to control hospitals. Among quality measures, affiliates experienced a 3.3% increase in patient experience (P=0.01; 95% CI: 0.01% to 5.3%), with no statistically significant impact on readmission and mortality. Conclusions: These findings suggest that affiliations lead to an increase in charges, improvement in patient experience, and no significant change in mortality or readmission. Further study of these strategic affiliations is needed to determine whether they warrant more transparency and scrutiny from antitrust agencies.