Does hospital consolidation promote quality?: Organizational and strategic issues

Two of the most important healthcare management topics studied over the past 37 years are hospital consolidation and quality. The specifics of consolidation's impact on quality are buried in a "black box" of organizational changes that typically follow consolidation. Academic researchers, both inside and outside health care, question the quality benefits. The paper discusses why quality benefits are not often observed.

Strategy and management theory are ambivalent about consolidation's impact on quality (i.e., suggest both positive and negative effects). Such ambivalence is evident in a two-stage conceptual model of how consolidation might impact quality. Consolidation is accompanied by strategic initiatives and organizational changes that can involve quality-promoting investments but may also harm quality.

The paper documents the ambivalent effects of consolidation on quality, which repeatedly manifest themselves in theory, a conceptual model, and several literature reviews. One explanation for the mixed results are methodological issues that hamper model estimation; another explanation is the two-stage conceptual model. In the first stage, hospitals consolidate to pursue organizational changes and strategic goals, some of which may target quality. In the second stage, such changes can exert quality impacts, but not necessarily. Most research focuses on the second stage rather than the first; research on the first is more indirect.

Hospital executives and researchers should not assume that consolidation will yield quality improvements. Executives often espouse quality improvement as a goal of consolidation but may or may not invest in quality improvement initiatives. Even when they do, such initiatives may not lead to higher quality.