Mergers and the Transference of Corporate Strategy: The Case of the Dialysis Industry

We utilize a rich panel dataset from the United States Renal Data System (USRDS) on over 1 million dialysis patients from 1998-2010 to study the effects of acquisitions in the U.S. outpatient hemodialysis industry. Utilizing facility-level changes in ownership from 1,335 acquisitions of independent facilities by chains, we document changes in provider behavior along a number of diminsions. Patients at acquired facilities have Epogen doses 73.3% higher than similar patients at the same facility before acquisition and are 5.7% less likely to be on a transplant waitlist within 1 year of starting dialysis. These changes in provider behavior increase Medicare payments to facilities by approximately 2%, but do not improve patient outcomes. Patients at acquired facilities are more likely to be hospitalized and more likely to have high hemoglobin. These findings suggest anti-trust authorities should consider outcomes other than market prices when evaluating acquisitions.