How Ownership Changes Affect Behavior and Outcomes : Evidence from Dialysis Facility Acquisitions ∗

We study how ownership changes among dialysis facilities affect providers’ behavior and patients’ outcomes. Using a rich panel of Medicare claims data on over 1 million dialysis patients, we document several ways in which behavior changes at the approximately 1200 independent facilities acquired by large chains during our sample period. Most notably, acquired facilities increase patients’ doses of highly reimbursed drugs, replace high-skill nurses with less-skilled technicians, and waitlist fewer patients for a kidney transplant. Although adopting the acquiring firm’s strategy results in higher Medicare payments for the acquired facility, it leads to worse patient outcomes for hospitalization and mortality. ∗We thank nephrologists Matthew Ellis and Ruediger Lehrich for providing valuable industry insights. We gratefully acknowledge research support provided the Social Sciences Research Institute. We thank Alexander Marsh, Lily Liu, Zilan Yang, Sungwoo Cho, and Hanmeng Wang for their research assistance. The data reported here have been supplied by the United States Renal Data System (USRDS). The interpretation and reporting of these data are the responsibility of the authors and should not be viewed as an official policy or interpretation of the U.S. government. †Department of Economics, Duke University, paul.eliason@duke.edu ‡Department of Economics, Duke University, benjamin.heebsh@duke.edu §The Fuqua School of Business, Duke University, ryan.mcdevitt@duke.edu ¶Department of Economics, Duke University and NBER, j.roberts@duke.edu