Hospital Acquisitions and Financial Performance: Staggered Difference-in-Differences Evidence from U.S. Medicare Cost Reports (2014–2023)

This project examines whether hospital acquisitions—measured as Medicare Change-of-Ownership (CHOW) events—are associated with changes in hospital financial performance. U.S. hospitals have consolidated rapidly over the past decade, and policymakers and antitrust regulators continue to debate whether acquisitions improve efficiency or instead reflect increased market power. Despite extensive work on prices and quality, causal evidence on hospital revenues—especially revenues scaled to utilization—remains comparatively limited, particularly in settings where acquisition timing varies across hospitals. The study constructs a national hospital-year panel (2014–2023) from an extract of the RAND Hospital Cost Report Information System (HCRIS) and merges it with CHOW seller event timing (2016–2023). Treatment is defined as each hospital’s earliest CHOW event, enabling a staggered-adoption design. The analytic dataset includes 60,001 hospital-year observations (~6,500 hospitals), of which 3,972 are treated hospital-years (6.62%). Outcomes include log net patient revenue per discharge, log operating revenue per discharge, log total net patient revenue, and log total operating revenue. Cost-per-discharge outcomes are not estimated because usable cost data among never-treated hospitals are too sparse to support the specified design. Causal effects are estimated using the Callaway and Sant’Anna (2021) staggered difference-in-differences framework implemented via csdid with a doubly robust inverse probability weighting approach, hospital-level clustered inference, event-study dynamics (−5 to +5 years), cohort-specific effects, joint pre-trend tests, placebo checks, and wild-bootstrap inference (999 repetitions) for preferred specifications. The primary expectation is that average post-acquisition effects on revenues per discharge are minor, with potential short-run disruption and heterogeneous effects by acquisition cohort. Findings are intended to inform evidence-based debate on consolidation by clarifying what hospital revenue patterns do—and do not—reveal about post-acquisition performance, and by motivating complementary evaluation of costs, quality, and access outcomes.