Does chain affiliation make a difference in efficiency of dialysis providers in the USA.

There has been an accelerated movement in the USA dialysis market towards affiliation with chain organizations. But little is known about the impact of this strategy of consolidation on provider performance of efficiency. This paper examines whether affiliation with multi-center dialysis chains creates a difference in technical efficiency. Data were obtained from 1994 to 2000 Independent Renal Facility Cost Report Data files of the Centers for Medicare and Medicaid Studies. Using multiple time series design with a comparison group, technical efficiency was examined through an intertemporal data envelopment analysis. The results showed that mean efficiency scores of chain-affiliated facilities in both pre- and post-affiliation periods are slightly higher than those of their independent counterparts, but the difference was not statistically significant. Members of the first and second largest chains did not appear to gain benefit from affiliation. In conclusion, greater technical efficiency of affiliated facilities is not the result of system engagement but rather the result of organizational maturation, or organizational learning. Engagement with the two largest systems does not provide members with its theoretical premises to achieve technically efficient production of dialysis treatments in multiple product markets.