Mergers and Quality Provision in Healthcare: Evidence from Nursing Homes

This paper tests whether mergers between nursing home chains and independent facilities affect quality of care using facility-level data from 1999-2019. Staggered difference-in-differences estimates suggest that acquired facilities experience a 5% reduction in health deficiency citations 2 years post-merger. This improvement relies on the continuous supply of efficiency from chains; persists for four years; and is specific to mergers between chains and independent homes. Quality effects are driven by mergers involving smaller, higher-quality and non-private-equity-owned chains. A structural model suggests that the quality effect is generated by enhanced cost efficiency achieved by facilities serving larger numbers of residents after mergers.