Health system mega-mergers fall short amid cost, quality concerns

Editor's Note

Chasing size through mega-mergers no longer guarantees sustainability for health systems, according to an April 15 article in HealthLeaders. Many of the nation’s largest systems are reporting significant losses, while emerging evidence links consolidation to stagnant or declining care quality and worsening workforce challenges.

The article highlights financial declines at some of the nation’s biggest hospital operators. For example, Providence, a 51-hospital nonprofit, lost $1.7 billion in 2022 and continued to post operating losses through 2024. Community Health Systems, despite divesting hospitals to reduce risk, recorded a $516 million loss in its most recent fiscal year.

These examples point to a broader trend: scale is no longer a proxy for financial health. As detailed in the article, large systems struggle to implement change, navigate complex operations, and maintain workforce morale.  

Quality may also suffer under consolidation. A review published in the Journal of the American College of Surgeons reportedly found that 77% of studies measuring post-merger quality showed no improvement—or a decline. These findings include both patient outcomes, such as readmissions, and management factors like staffing levels. When quality falters, so does hospital revenue.

Labor issues also compound with consolidation. The article cites research from the American Economic Review showing post-merger wage declines for nurses and pharmacy staff. Physicians in acquired practices may lose decision-making autonomy, contributing to burnout and attrition.

Instead of aggressive acquisitions, health systems are shifting toward partnerships, joint ventures, and market realignment, HealthLeaders reports. Strategies like divesting from non-core assets and teaming up with specialized partners—such as UMass Memorial’s joint venture for behavioral health beds—offer targeted growth without excessive risk.  

The full report offers additional context and examples, as well as testimony from healthcare executives and other stakeholders.