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Mergers and Quality Provision in Healthcare: Evidence from Nursing Homes

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  • Pinka Chatterji
  • Chun-Yu Ho
  • Wenqing Li

Abstract

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.

Suggested Citation

  • Pinka Chatterji & Chun-Yu Ho & Wenqing Li, 2025. "Mergers and Quality Provision in Healthcare: Evidence from Nursing Homes," NBER Working Papers 33967, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33967
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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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