Mergers and Quality Provision in Healthcare: Evidence from Nursing Homes / Pinka Chatterji, Chun-Yu Ho, Wenqing Li.

Format:

Book

Author/Creator:

Chatterji, Pinka.

Contributor:

Ho, Chun-Yu.

Li, Wenqing.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w33967.

NBER working paper series no. w33967

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

This paper examines the impact of mergers between nursing home chains and independent facilities on quality of care, utilizing facility-level data from 1999-2019. Using a staggered difference-in-differences framework, we find that acquired facilities experience an 8% reduction in health deficiency citations in the three-year period post-merger. This effect persists for at least five years and is more pronounced in cross-market mergers, as well as mergers involving smaller or low-deficiency chains. Estimating a structural model suggests that this decline in deficiencies is driven by post-merger reductions in the marginal costs of serving residents. However, this cost efficiency is accompanied by a decline in direct care hours. Furthermore, the reduction in deficiencies is concentrated on low-severity categories, suggesting that mergers improve regulatory compliance rather than clinical outcomes. Consistently, we find no meaningful impact of mergers on residents' health outcomes.

Notes:

June 2025.

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