Effect of System Affiliation on Hospital Choice: Evidence from Rural Markets
Presented by Caitlin Carroll, PhD
Assistant Professor
Division of Health Policy & Management
Hospital markets have consolidated rapidly in recent years. The share of hospitals under system control has grown from 40% to 70% since 1990, driven by expansion of national and regional health systems. Proponents of this trend argue that system affiliation allows hospitals to harness economies of scale and can lead to efficiency improvements. However, hospital consolidation can also have anticompetitive effects and increase prices. Trade-offs from system membership are particularly acute in rural markets, where many hospitals have low patient volumes and face financial distress. System affiliation can increase capital funding and improve operational sophistication at rural hospitals, suggesting that affiliation may help rural hospitals attract patients and serve as an alternative to closure. However, system affiliation may also hasten diversion of patients out of rural areas – for example, if systems shut down unprofitable or duplicative service lines at acquired hospitals. In this presentation, hear Caitlin Carroll discuss trends in system affiliation in rural markets and assess how system acquisition of rural hospitals affects patients’ hospital choices.
