Bigger hospitals, bigger bills

THE TYPICAL American can now choose between two hospitals for routine inpatient care. In 47% of metropolitan statistical areas, one or two health systems control the entire market, according to research from the Kaiser Family Foundation. In 97% of those areas, the market is "highly concentrated" by the standards the Department of Justice and Federal Trade Commission use to flag anticompetitive risk. A single system held 100% of hospital beds in more than half of the 376 metro areas studied by two academic researchers in 2022.

It is not a coincidence that Americans spend 17% of GDP on health care, far more than any other rich country, and get poorer results.

The surface story is about monopoly power. The deeper one is about enforcement that failed to use the antitrust laws it was given.

Hospital consolidation is a long-running story. In 1970, roughly 90% of American hospitals were independent. By 2019 that share had fallen to 32%. Over a thousand hospital mergers were announced between 2000 and 2020. The FTC challenged 13 of them. A Yale study estimated that 20% of those transactions — 238 deals — should have raised antitrust flags. The agencies let the other 977 proceed.

The economic consequences are not subtle. A 2025 federal review found that hospital mergers in concentrated markets raise prices by between 6% and 65%, with the steepest increases in the most monopolised areas. A 2023 Senate Finance Committee analysis noted that increases of 20% or more are common. And the GAO, America's congressional audit agency, found in 2025 that hospital-physician consolidation — when systems buy up doctors' practices — raises physician-service prices by an average of 14%.

The "good citizen" shield

Why did the agencies let it happen? Partly because of a peculiar judicial indulgence. For decades courts accepted a "good citizen" defence: the argument that nonprofit hospitals, governed by community boards and committed to charity care, would not abuse monopoly power. That reasoning is a species of naive institutional faith. A 2024 paper in the Washington University Law Review documented how courts bent market definitions to avoid finding violations, effectively excusing hospitals from the antitrust discipline applied to other industries. Price competition, the research showed, tended to disappear precisely when merger plans were announced — evidence that market power was being exercised, not restrained.

Enforcement agencies also lacked resources. The annual economic harm from hospital mergers that violated federal guidelines — in lost wages, tax revenue, and premature deaths — has been estimated at around $500 million. That roughly equals the FTC's entire 2023 enforcement budget. Agencies were, in effect, outspent by the market they were supposed to oversee.

No quality dividend

The justification for consolidation has always been integration: larger systems coordinate care, reduce duplication and share best practice. The evidence does not bear this out. Research from the Harvard T.H. Chan School of Public Health found that consolidation did not improve hospital performance and that patient-experience scores deteriorated after mergers. The GAO found generally no change in quality following hospital-physician consolidation. A study using newly released insurer-price data from UnitedHealthcare and Aetna confirmed the pattern: the highest-concentration markets charged 11% more for outpatient procedures than the lowest, with no quality offset.

To be sure, some rural mergers are driven by distress rather than ambition. In 2024, a record 30.6% of announced hospital deals involved a financially troubled party, according to Kaufman Hall, a health-system consultancy. Hospital closures are real, and some consolidation simply reflects an industry trying to survive. But distress is not an excuse for market power: even a necessary merger should be structured to preserve competition, and regulators should require that structure.

The downstream cost

The economic damage does not stop at inflated premiums. Health-care costs are passed through to employers, who offset them by cutting wages and headcount. A 2024 study by the Center for Equitable Growth estimated that a 1% increase in health-care prices reduces non-health-firm payroll by 0.4% and employment by the same amount. A typical merger — raising prices by 5% — costs around $32m in wages, eliminates 203 net jobs and is associated with one to two additional deaths from suicide or opioid overdose within a year of separation. The burden falls on low- and middle-income workers, for whom health-insurance premiums are a larger fraction of total compensation.

That last finding matters beyond its moral weight. It means that hospital monopoly power is a form of stealth wage suppression, disguised as a medical-cost problem. It is also a drag on federal tax receipts and a drain on unemployment-insurance programmes. The problem is not just that patients pay more. It is that the broader economy is taxed by a sector that faces no price discipline.

A belated awakening

Something is shifting. In May 2024 the DOJ created a Task Force on Health Care Monopolies and Collusion. In early 2026 it sued the New York–Presbyterian Hospital system over "all-or-nothing" contracting clauses that force insurers to include every NYP facility in their networks, regardless of price. The complaint cites testimony from NYP's own senior contracting executive that competitors' lower prices have "no relevance" — and an internal analysis showing that letting insurers steer patients to cheaper options would cost the system hundreds of millions. The DOJ also sued OhioHealth, Columbus's dominant system, over similar tactics combined with "gag rules" limiting price transparency.

These are conduct cases, not merger challenges. They target the ways in which systems exercise monopoly power after the fact, rather than preventing the concentration that creates it. That is a pragmatic pivot. Conduct litigation can be faster and more targeted than merger retrospection, which has proved difficult for courts to unwind. The Sutter Health case, in which California extracted a $575m settlement in 2019 over all-or-nothing contracting, shows the model can work.

Yet conduct litigation alone is insufficient. It addresses symptoms while the underlying market structure remains. The 2023 update to federal merger guidelines lowered the threshold for a "highly concentrated" market from an HHI of 2,500 to 1,800, a change that should make agencies more willing to block deals. Whether they actually do so is an open question. The legacy of permissiveness is deep, and the incentives for consolidation — scale, insurer negotiation leverage, the need to spread expensive technology — remain powerful.

The better answer is threefold. First, the DOJ and FTC should resume vigorous merger review in hospital markets, with the presumption that deals creating or reinforcing single-system dominance are presumptively anticompetitive. Second, states should use their own antitrust laws — as California and Ohio have — to fill gaps where federal action is slow or courts are reluctant. Third, policymakers should push price transparency beyond its current form, ensuring that insurers can actually steer patients to lower-cost providers without contractual retaliation.

The American health-care system is broken in many ways.But one of its most curable defects is the absence of competition in hospital markets. The tools exist. What is required is the will to use them.