Hospital monopolies. Workers pay the price.

IN 2002 TO 2020, more than 1,000 hospital mergers took place in the United States. During that period, the Federal Trade Commission took enforcement action against just 13 of them. The result is a health-care system in which one or two health systems controlled the entire market for inpatient care in 47% of metropolitan areas in 2024, according to KFF, a health-policy research organisation. In 97% of metropolitan areas, hospital markets meet the Department of Justice's threshold for "highly concentrated". The story is not just that American hospitals are expensive. It is that they are expensive because they have been allowed to become local monopolies, and the cost is paid not only by patients but by workers across the economy in the form of lower wages and fewer jobs.

The common frame—that hospital monopolies drive up the cost of health care—is correct but incomplete. The real question is not whether consolidation raises prices. Three decades of research establish that it does. The question is why the system has permitted it, who bears the consequences, and whether the regulatory response now emerging is too little, too late.

The mechanics of extraction

Hospital mergers raise prices by increasing bargaining power over insurers. When a single system controls most beds in a market, insurers have little choice but to accept higher rates or risk losing network adequacy. A 2025 study using commercial price data from UnitedHealthcare and Aetna found that hospital-system concentration is associated with up to an 11% increase in prices for outpatient procedures. In the most concentrated markets (Herfindahl-Hirschman Index above 5,000, a measure of market dominance), insurers' own concentration mattered far less: high insurer concentration reduced prices by only 11 percentage points versus a 49-percentage-point reduction in competitive hospital markets. When the hospital side of the market is near-monopoly, the insurer side has nowhere left to push.

A 2025 federal review put the range wider: mergers in concentrated markets increase prices by 6% to 65%, with the highest increases in the most concentrated markets. A Yale University study published in the American Economic Review found that from 2010 to 2015, mergers that were predictably anticompetitive by the FTC's own screening tools raised prices by more than 5%. And the trend is not confined to hospitals themselves. A study published in the National Bureau of Economic Research digest in November 2025 found that when hospitals acquire physician practices, physician service prices rise by 15.1% within two years. The mechanism is the same: reduced competition, greater bargaining leverage, higher prices.

No quality dividend

To be sure, hospital executives and their allies do not defend consolidation on greed. The standard justification is that larger systems achieve better outcomes through economies of scale, care coordination, and shared expertise. The evidence does not support this. A review by researchers at the University of Pennsylvania's Leonard Davis Institute, published in November 2025, examined three decades of merger research and found no rigorous evidence that hospital mergers improve quality as measured by mortality rates, complications, or patient satisfaction. In some cases quality worsens. The review identified four theoretical channels through which mergers could improve care—higher volumes, better nursing, peer advice, and diagnostic accuracy—and found none of them borne out.

The incentive structure explains why. A firm that gains pricing power through a merger has little reason to invest in the operational improvements that would be required to raise quality. The gain in leverage allows higher prices without the effort. As the Pennsylvania researchers put it, regulators should stop accepting quality claims to justify consolidations, because the only predictable outcome is increased pricing power.

Who pays

Here is where the story moves beyond health-care policy into general economics. Because most American workers receive health insurance through their employers, rising hospital prices are passed through to higher premiums, which employers then offset by reducing wages or employment in the non-health sector. A study from Yale's School of Management found that a 1% increase in health-care prices caused by hospital mergers lowers payroll and the number of employees at non-health firms by approximately 0.4%. The burden falls disproportionately on low- and middle-income workers, because health-insurance premiums are roughly equal across workers within a firm, meaning a fixed premium increase represents a larger share of total compensation for a $40,000 worker than for a $400,000 one. Rising hospital prices, in other words, function as a regressive tax on employment.

The arithmetic is disquieting. A single hospital merger that raises prices by 5%—the average for predictably anticompetitive deals—results in roughly $32 million in lost wages, 203 job losses, and $6.8 million in reduced federal tax revenue. One year of mergers that violated federal guidelines cost an estimated $400 million in wages and 2,543 jobs. The study also linked these job losses to mortality: in areas with the largest price increases, approximately one in 140 individuals separated from the labour market died from an opioid overdose or suicide within a year. The cost of hospital monopoly power is not confined to the billing department.

The enforcement gap—and its narrow correction

For decades, the FTC's approach to hospital mergers was permissive. Over 1,000 deals, 13 enforcement actions. The Yale study found that roughly 20% of these mergers could have been predicted to meaningfully lessen competition using the agency's own tools. About half of the predictably anticompetitive mergers were even required to be reported under the Hart-Scott-Rodino Act, suggesting a vast gap between notification and action. The structural explanation is not hard to find: hospital mergers are politically popular in the communities they touch, because they promise to save struggling facilities and create local employment. Regulators, sensitive to that politics and to the nonprofit status of many health systems, defaulted to approval.

The second Trump administration has done something unexpected: it has made health-care antitrust a priority. In March 2026, FTC Chairman Andrew Ferguson launched a dedicated Health-care Task Force. The DOJ has brought conduct actions against hospital-insurer contracting arrangements that force insurers to include all of a hospital system's facilities if they include any—a practice that prevents payers from steering patients to lower-cost competitors. Cases have been filed against OhioHealth and New York-Presbyterian Hospital. The FTC obtained a preliminary injunction in January 2026 to block Edwards Lifesciences' acquisition of a rival in a nascent device market, its first litigated merger win of the term.

This is a reversal from the Biden-era approach, which was more aggressive on merger-blocking rhetoric but less effective in practice. The Trump administration has revoked Biden's broad pro-competition executive order, yet its health-care enforcement is sharper: it targets not just mergers but the contracting behaviour of already-consolidated systems. The lesson is not partisan. It is that enforcement works when it focuses on specific anticompetitive conduct rather than general principles.

What remains to be done

The enforcement shift is welcome but incomplete. Merging 1,000 hospitals into local monopolies created a structural problem that merger review alone cannot reverse. The 47% of metro areas now controlled by one or two systems will not be undone by blocking future deals. What is needed is a combination of measures.

First, conduct enforcement against thecontracting practices that entrench pricing power—such as the "all-or-nothing" network demands the DOJ is now challenging—should continue and expand. These restrictions prevent the market mechanism that would otherwise discipline prices: the ability of insurers to reward lower-cost providers.

Second, state attorneys general should treat horizontal hospital mergers as presumptively anticompetitive, regardless of whether the merging entities are nonprofit or for-profit. The nonprofit label has long served as a shield against scrutiny, despite the fact that nonprofit hospitals exercise the same bargaining power and charge the same high prices as their for-profit counterparts.

Third, policy should encourage competition from lower-cost settings. Ambulatory surgery centres, independent clinics, and physician-led practices offer care at substantially lower cost for many procedures. Hospital systems that acquire physicians and then steer them into higher-priced hospital outpatient departments are not improving care; they are migrating volume to more expensive settings. Policies that make it easier for insurers to pay for care outside the hospital system would create countervailing pressure.

The broader lesson is about institutional credibility. The FTC allowed a thousand hospital mergers to proceed with minimal scrutiny while telling itself that quality gains would justify the trade-off. The evidence showed no such gains. Regulators that accept promises they cannot verify lose the trust they are meant to protect. The health-care task force now in place represents a belated recognition of that failure. Whether it is enough to restore competition in a system that has spent two decades becoming less competitive is the question the next administration will inherit. Consumers may pay the bills, but workers pay the price. That distinction matters.