Ž . Journal of Health Economics 19 2000 767–791 www.elsevier.nlrlocatereconbase Hospital mergers and acquisitions: does market consolidation harm patients? Vivian Ho a, ) , Barton H. Hamilton b a School of Public Health, UniÕersity of Alabama, Birmingham, Birmingham, AL, USA b Olin School of Business, Washington UniÕersity in St. Louis, Campus Box 1133, One Brookings DriÕe, St. Louis, MO 63130-4899, USA Received 1 July 1998; received in revised form 1 March 2000; accepted 31 March 2000 Abstract Debate continues on whether consolidation in health care markets enhances efficiency or instead facilitates market power, possibly damaging quality. We compare the quality of hospital care before and after mergers and acquisitions in California between 1992 and 1995. We analyze inpatient mortality for heart attack and stroke patients, 90-day readmis- sion for heart attack patients, and discharge within 48 h for normal newborn babies. Recent mergers and acquisitions have not had a measurable impact on inpatient mortality, although the associated standard errors are large. Readmission rates and early discharge increased in some cases. The adverse consequences of increased market power on the quality of care require further substantiation. q 2000 Elsevier Science B.V. All rights reserved. JEL classification: Ill; L41 Keywords: Mergers; Acquisitions; Quality 1. Introduction Competitive pressures have led to mergers among all types of providers in the health care industry, including hospitals, HMOs, nursing homes and diagnostic ) Corresponding author. Tel.: q 1-205-975-0532; fax: q 1-205-936-3367. Ž . E-mail address: vho@uab.edu V. Ho . 0167-6296r00r$ - see front matter q 2000 Elsevier Science B.V. All rights reserved. Ž . PII: S0167-6296 00 00052-7