Hospital Mergers, Health Provider Concentration, and Medical Debt

We leverage consumer credit panel data covering 2011-2019 to examine how hospital consolidation impacts individual medical debt. In our preferred event study specifications, exposure to hospital mergers causes significant increases in the likelihood of having medical debt in collections, the flow of new debt generated over the previous twelve months, and the total outstanding stock. These effects amplify over time: five years after treatment, the effects on our outcomes of interest range from 11% to 20%. We also find evidence that additional balances are carried on credit cards. In a placebo test, we find no effect of merger exposure on analogous outcomes for non-medical debt in collections. Using comprehensive county-level healthcare spending and utilization data from the Institute for Health Metrics and Evaluation's Disease Expenditure Project (ultimately sourced to insurance claims), we investigate the mechanisms underlying these effects. We identify three complementary channels: hospital mergers raise the price of commercially insured care, expand the set of healthcare encounters for which patients bear out-of-pocket financial responsibility, and shift the local payer mix away from Medicare and toward commercial insurance. Together, these channels increase both the cost and the breadth of patients' financial exposure to healthcare.