Is Bigger Better?: The Effect of Hospital Consolidation on Index Hospitalization Costs and Outcomes Among Privately Insured Recipients of Immediate Breast Reconstruction.

OBJECTIVES: To examine the relationship between hospital market competition and inpatient costs, procedural markup, inpatient complications, and length of stay among privately insured patients undergoing immediate reconstruction after mastectomy. METHODS: A retrospective cross-sectional analysis of privately insured female patients undergoing immediate breast reconstruction in the 2009 to 2011 Nationwide Inpatient Sample was performed. The Herfindahl-Hirschman index was used to describe hospital market competition; associations with outcomes were explored via hierarchical models adjusting for patient, hospital, and market characteristics. RESULTS: A weighted total of 42,411 patients were identified; 5920 (14.0%) underwent free flap reconstruction. In uncompetitive markets, 6.8% (n=857) underwent free flap reconstruction, compared with 13.6% (n=2773) in highly competitive markets and 24.6% (n=2290) in moderately competitive markets. For every 5 additional hospitals in a market, adjusted costs were 6.6% higher (95% CI: 2.8%-10.5%), for free flap reconstruction, and 5.1% higher (95% CI: 2.0%-8.4%) for nonfree flap reconstruction. Similarly, higher procedural markup was associated with increased hospital market competition both for nonfree flap reconstruction (5.5% increase, 95% CI: 1.1%-10.1%) and for free flap reconstruction (8.2% increase, 95% CI: 1.8%-15.0%). Notably, there was no association between incidence of inpatient complications or extended length of stay and hospital market competition among either free flap or nonfree flap reconstruction patients. CONCLUSIONS: Decreasing market competition was associated with lower inpatient costs and equivocal clinical outcomes. This suggests that some of the economies of scale, access to capital and care delivery efficiencies gained from increased market power following hospital mergers are passed onto payers and consumers as lower costs.