Concentrating public services in fewer facilities has become an increasingly common response to cost-containment pressures. We study the consequences of such consolidation in hospital care, exploiting a national reform in Italy that imposed a binding cap on hospital beds and generated staggered reductions in ward-level capacity. Using unique administrative data covering a large panel of Italian hospitals and a difference-in-differences design, we find that surviving same specialty departments increase activity by 14–32 percent following downsizing elsewhere in their local networks. Total pre-operative patient days increase by 31 percent, indicating greater pressure on remaining capacity. Event-study estimates show increased mortality for myocardial infarction and stroke, but not for conditions less sensitive to treatment delays. The adjustment is concentrated in public hospitals, with no statistically significant response among private providers. Our findings highlight a trade-off in public service consolidation: concentrating activity increases utilization of remaining capacity but can worsen outcomes when timely service provision is critical.