The Hidden Effect of M&A on CMS Patient Safety Indicators

As healthcare systems race to expand, reduce costs, and increase market dominance, mergers and acquisitions (M&A) have become increasingly common, averaging more than 250 transactions annually over the past five years. While most conversations around M&A emphasize financial growth and operational efficiencies, a vital aspect often goes unnoticed: the effect of these transformations on CMS Patient Safety Indicators (PSIs).

Patient safety is a key driver of hospital performance, reimbursement, and public trust. The Centers for Medicare & Medicaid Services (CMS) relies on PSIs to monitor preventable adverse events such as post-surgical infections, in-hospital falls, pressure ulcers, and sepsis. These metrics directly influence Value-Based Purchasing (VBP) payments, making it essential for hospitals to maintain high standards, especially during organizational transitions.

However, when M&A is involved, the result is often increased complexity, variability in care delivery, and heightened risk to safety outcomes.

Why CMS Patient Safety Indicators (PSIs) Matter More Than Ever

The Centers for Medicare & Medicaid Services (CMS) uses PSIs to monitor preventable complications in hospitals, such as in-hospital falls, sepsis, postoperative respiratory failure, and pressure ulcers. These indicators, especially the PSI 90 composite score, are publicly reported on CMS Care Compare and directly tied to payment under the Hospital-Acquired Condition Reduction Program (HACRP). Hospitals performing in the bottom quartile can lose up to 1% of their total Medicare inpatient reimbursements.

That means a dip in PSI scores during post-merger integration can quickly translate into millions in lost revenue and reputational damage.

The Merger Surge and the Safety Slump

While M&A is often touted as a quality booster, studies paint a more nuanced picture:

• A study of over 200 hospital mergers found that patient experience scores at acquired hospitals dropped from the 50th to the 41st percentile post-merger (JAMA, 2020).
• According to Ariadne Labs, consolidation frequently disrupts workflows, introduces unanticipated changes in patient demographics, and forces clinicians to adapt to unfamiliar teams and tech platforms—all of which can trigger avoidable safety lapses.
• CMS data confirms that even a modest uptick in PSI events like falls or post-op infections can shift hospitals into penalty territory under HACRP.

The Hidden Costs: Safety Risks After M&A

Disparate EHR and IT Systems

Mergers often mean blending incompatible electronic health records (EHRs) and reporting platforms, increasing the risk of missed documentation, duplicate entries, or incorrect PSI coding.

Staff Turnover and Burnout

Post-merger periods see 12–18% higher clinical staff turnover, which erodes institutional knowledge and slows down onboarding and compliance with safety protocols.

Workflow Fragmentation

When clinical processes differ across merged sites, hospitals see a rise in variation-related errors. For example, inconsistent protocols can elevate sepsis (PSI 13) or iatrogenic pneumothorax (PSI 6) rates.

Culture Shock

M&A-driven organizational changes can demoralize staff, reduce error reporting, and hamper the adoption of standardized safety practices, directly affecting PSIs.

A Look at the Upside

It’s not all bad news. With robust planning, transparent communication, and strong clinical leadership, M&A can enhance care. Mortality rates can fall by up to 27% within three years post-merger when integration is strategically executed (Health Affairs, 2022).

But these gains depend on treating patient safety as a central priority, not an afterthought.

What Forward-Looking Hospitals Should Do

• Audit LOS & PSI Outliers: Identify which departments or procedures are contributing most to variation or PSI-triggering events.
• Unify EHR and Documentation: Standardize coding, safety protocols, and reporting practices across the merged entity to avoid gaps in care and misreported indicators.
• Pilot Quality Improvement in High-Risk Areas: Focus initial efforts on high-volume surgical units, where PSI events are most likely.
• Invest in Clinical Governance & Training: Ensure physicians participate in integration planning and adhere to updated standards aligned with CMS safety measures.
• Track PSI 90 in Real-Time: Implement dashboards and analytics to monitor post-merger PSI trends, compare performance with pre-merger baselines, and flag early warning signs.

Key Stats at a Glance

• Patient experience scores drop by 9 percentile points post-merger (JAMA).
• Hospitals in the bottom PSI 90 percentile face 1% Medicare payment penalties (CMS HACRP).
• Mortality reductions of up to 27% are achievable with successful integration (Health Affairs).
• Over 100 M&A deals annually in U.S. hospitals since 2014 (WTW Global Trends).

Final Thought: Consolidate with Caution

Healthcare can undergo revolutionary changes as a result of M&A, but only if quality and safety are ingrained in the agreement. Ignoring CMS Patient Safety Indicators during a merger is not only pointless but also costly in the value-based care, transparency, and financial pressures of 2025.

Health systems need to consider whether they are scaling safety in tandem with scale if they are to fully realise the promise of consolidation.

Because safer results for every patient, every time, are ultimately the best indicator of a merger's success, not just market share.

Sources: CMS.gov, JAMA Network, Health Affairs, Ariadne Labs, Leapfrog Group, WTW Global Medical Trends Survey (2025)