Patient Experience, Care Quality Linked to Market Consolidation of Insurers and Hospitals

Insurer and hospital consolidation patterns impact the quality of medical services.

Insurer consolidation can have a positive impact on patient experience, recent research indicates.

Earlier research has shown that decreases in hospital competition have a negative impact on quality and increase prices of medical services. In theory, as insurers consolidate hospitals may view boosting quality as a key bargaining strategy because patients could pressure payers to keep hospitals in-network.

An article published recently in Health Services Research found evidence in support of the theory about insurer consolidation. "Changes in patient satisfaction are positively associated with increases in insurance concentration and negatively associated with increases in hospital concentration," the HSR researchers wrote.

The HSR article, which features information collected at more than 3,000 hospitals, generated two primary data points:

1. Patient rating of hospitals: Compared to a market with 20^th percentile insurance concentration and 80^th percentile hospital concentration, a market with 80^th percentile insurance concentration and 20^th percentile hospital concentration increases the number of patients who rate hospitals highly from 66.9% to 67.9%.

2. Patient recommendation of hospitals: Compared to a market with 20^th percentile insurance concentration and 80^th percentile hospital concentration, a market with 80^th percentile insurance concentration and 20^th percentile hospital concentration increases the number of patients who definitely recommend hospitals from 69.7% to 70.8%.

Interpreting the data
 

The lead author of the HSR research told HealthLeaders that the impact of shifting market concentration is modest but significant.

"We find that a large but not implausible change in market structure causes a 4 percentage point movement in the distribution of patient experience scores, which we don't view as trivial. In more human terms, an additional 1% of hospital inpatients in that market would report having a positive experience," said Caroline Hanson, who recently earned her PhD from the Department of Health Policy and Management at Johns Hopkins Bloomberg School of Public Health in Baltimore.

Hanson and her coauthors also found that insurance market consolidation has a relatively higher beneficial impact on care quality in markets where the hospital market is more concentrated. "This suggests that when a hospital market is not concentrated, other hospitals exert enough competitive pressure that insurance concentration has no additional impact on quality," the researchers wrote.