You might have noticed your community hospital has a new name. Maybe there's a shiny logo on the building and signs mentioning a larger health system. What you've probably also noticed is that your bills are higher, and getting an appointment somehow feels harder than before.

This isn't coincidental. Across America, hospitals have been merging at an unprecedented rate, with over 1,600 mergers in the past two decades. We're often told these combinations create efficiency and better care coordination. But the research tells a different story—one where consolidation consistently raises prices while quality improvements remain elusive. Understanding why this happens helps explain some of the most frustrating aspects of American healthcare.

When hospitals merge, something fundamental shifts in the negotiation between healthcare providers and insurance companies. In a competitive market, insurers can push back on high prices because they can tell their customers to go to a different hospital. But when one system owns most of the hospitals in a region, that leverage disappears.

Insurance companies need to include major hospitals in their networks. If the dominant system isn't covered, employers and individuals won't buy that insurance plan. Merged hospital systems know this, and they use it. Studies consistently show that hospital mergers lead to price increases of 20% or more, even when there's no improvement in services offered.

The result is what economists call market power. Your hospital didn't get more expensive because it got better or because its costs went up. It got more expensive because it could. The merger removed the competitive pressure that kept prices somewhat in check. And those higher prices flow directly to your bills, your insurance premiums, and your employer's healthcare costs.

Takeaway

When you see hospitals merging in your area, expect your healthcare costs to rise within a few years—not because care improved, but because the merged system gained the power to demand higher prices from insurers who have no alternative.

Every hospital merger announcement promises the same things: reduced administrative costs, eliminated duplicate services, coordinated care, and savings that will benefit patients. These claims sound logical. Surely combining two hospitals means you need only one billing department, one HR team, one set of executives?

The reality is disappointingly different. Research tracking hospital mergers over time finds that the promised efficiencies rarely materialize in meaningful ways. Administrative costs don't shrink—they often grow as layers of management multiply. Duplicate services persist because closing a profitable service line means losing revenue. And those executive teams? They tend to expand rather than consolidate.

What mergers are efficient at is extracting value. Larger systems are better at capturing physician practices, which drives referrals to their facilities. They're skilled at negotiating favorable contracts with suppliers—savings they typically keep rather than pass along. The efficiency gains that do exist flow to the system's bottom line, not to lower prices for patients or better care delivery.

Takeaway

When evaluating merger promises, remember that hospital systems are businesses responding to incentives. The incentive to raise prices after gaining market power is immediate and strong; the incentive to find operational savings and share them with patients is weak and easily deferred.

If hospital consolidation raises prices and doesn't improve care, why do regulators keep allowing it? The answer reveals gaps in how we've designed antitrust enforcement for healthcare markets.

Traditional antitrust analysis focuses on preventing monopolies that harm consumers through higher prices. But healthcare is tricky. Hospitals argue that mergers create non-profit systems serving community benefit, or that they need scale to invest in expensive technology. They promise to serve Medicaid patients and maintain rural facilities. Regulators often accept these arguments, even though evidence shows the promises frequently go unfulfilled.

There's also a geographic problem. Antitrust enforcement defines markets narrowly, so a merger might pass review even if it creates dominance in certain specialties or neighborhoods. And once a merger is approved, it's nearly impossible to undo. The Federal Trade Commission has recently become more aggressive about challenging hospital mergers, but decades of approved consolidation have already reshaped most healthcare markets into oligopolies where a handful of systems dominate.

Takeaway

Healthcare consolidation isn't inevitable—it's the result of policy choices. Citizens can advocate for stronger merger review and support state-level efforts to monitor healthcare prices and block harmful consolidation before it happens.

Hospital consolidation represents a slow-motion transformation of American healthcare markets. Each individual merger seems reasonable, but the cumulative effect creates systems with enormous power over pricing and limited accountability for delivering value.

Understanding this dynamic matters because it affects everyone who uses healthcare. Higher hospital prices are the largest driver of rising insurance premiums and medical bills. When you advocate for policy change or choose your insurance plan, knowing how consolidation shapes your options helps you make better decisions and push for meaningful reform.