Every year, dozens of hospitals merge or get acquired across the United States. Regulators review these deals, academics publish studies showing price increases, consumer advocates sound alarms—and yet the consolidation continues. Between 2010 and 2020, over 1,000 hospital mergers occurred, fundamentally reshaping healthcare markets nationwide.

The pattern is remarkably consistent. Two hospitals announce a merger citing efficiency gains and improved care coordination. Antitrust authorities investigate. The deal either proceeds with minor conditions or faces no challenge at all. Five years later, research confirms what critics predicted: prices went up, quality stayed flat.

Understanding why this cycle persists requires looking beyond any single merger to examine the structural gaps in how we regulate healthcare markets. The problem isn't that regulators are asleep—it's that the tools they're using were designed for a different kind of market entirely.

Traditional antitrust analysis asks whether a merger will substantially lessen competition. For hospitals, answering this seemingly simple question becomes surprisingly complicated. Defining the relevant market is the first battleground. How far will patients travel for routine care versus emergency services versus specialized procedures? Merging hospitals routinely argue their market is larger than it appears, diluting their combined market share on paper.

Then come the efficiency claims. Hospitals promise that combining operations will reduce administrative costs, enable better care coordination, and improve purchasing power. These projected savings are presented as consumer benefits that offset potential price increases. Antitrust authorities must weigh speculative future efficiencies against uncertain competitive harm—a calculation that often favors approval.

The legal burden of proof creates another advantage for merging parties. Regulators must demonstrate that harm is likely, not just possible. Hospital lawyers have become skilled at generating economic analyses showing contested markets, potential efficiencies, and plausible scenarios where prices won't increase. Even when agencies challenge mergers, courts have sometimes accepted hospital arguments that reviewers considered weak.

State certificate-of-need laws add another layer of complexity. In many states, hospitals need government approval to add beds or services. Ironically, these regulations—originally designed to control healthcare costs—can actually strengthen merger arguments by limiting potential new competitors from entering consolidated markets.

Takeaway

Antitrust law's requirement to prove likely harm, combined with the complexity of healthcare markets and persuasive efficiency projections, creates a structural advantage for hospitals seeking to merge.

The research on post-merger outcomes has reached unusual consensus. Hospital mergers consistently raise prices. A 2019 systematic review found average price increases of 6-18% following horizontal mergers between competing hospitals. Some studies documented increases exceeding 40% in markets where mergers created near-monopolies.

Quality improvements promised during merger reviews rarely materialize. Studies examining mortality rates, readmission rates, and patient safety indicators find no systematic improvement after consolidation. Some research has found quality deterioration in certain metrics. The efficiency claims used to justify approval don't translate into better patient outcomes.

Cross-market mergers—where hospitals in different geographic areas combine under common ownership—present a newer concern. Even when hospitals don't directly compete, common ownership appears to increase negotiating leverage with insurers. Research shows these deals also lead to price increases, complicating the traditional competitive analysis framework.

Why don't higher prices prompt employer and insurer resistance that blocks mergers? Consolidated hospital systems become "must-have" providers for insurance networks. Employers want their workers to have access to the major hospital system in town. This dynamic gives merged hospitals leverage that extends beyond direct market share calculations.

Takeaway

Decades of research shows hospital mergers raise prices by 6-18% on average while producing no measurable quality improvements—yet this evidence rarely prevents deal approval.

If traditional antitrust can't prevent harmful consolidation, what other policy tools might work? Some states have experimented with enhanced merger review processes specific to healthcare. Massachusetts requires additional scrutiny for any healthcare transaction likely to increase costs or reduce access. This approach allows state regulators to consider factors beyond federal antitrust standards.

Post-merger conduct remedies represent another avenue. Rather than trying to block mergers, regulators could approve deals with binding price caps or rate-growth limitations. Some states are exploring requirements that merged hospitals maintain historical price levels or limit increases to inflation-linked benchmarks. The challenge is enforcement and the difficulty of predicting appropriate pricing years into the future.

More fundamental reforms target the underlying incentives. Moving away from fee-for-service payment toward capitated or global budget models could reduce the financial benefits hospitals gain from consolidation. If hospitals can't charge higher prices for more services, merger incentives shift. Maryland's all-payer rate setting system—which sets hospital prices regardless of insurer—has notably limited consolidation's price effects.

Breaking up existing hospital monopolies remains politically and legally difficult. However, some experts argue that retroactive enforcement against mergers that have produced documented harm could deter future problematic deals. The Federal Trade Commission has begun showing more willingness to challenge consummated mergers in other industries.

Takeaway

State-level healthcare-specific review, post-merger price constraints, and payment system reforms offer alternatives to traditional antitrust that may better address hospital consolidation's unique dynamics.

Hospital consolidation continues because the regulatory framework treats healthcare like any other market. But healthcare isn't like buying airline tickets or choosing a smartphone. Patients facing emergencies can't comparison shop, insurance networks limit choices, and information asymmetries persist despite transparency efforts.

The evidence gap between what we know and what regulators can prove creates space for deals that harm consumers. Efficiency claims remain persuasive in merger reviews despite decades of contradictory post-merger evidence.

Addressing this challenge likely requires layered approaches—strengthened federal antitrust enforcement, state-level healthcare-specific review, and payment reforms that change consolidation incentives. Until then, expect more mergers, more price increases, and more hand-wringing about why nobody stopped them.