Get the facts: How does hospital consolidation impact healthcare costs?

• Hospital consolidation is widely recognized as a main contributor to rising healthcare costs.
• Hospitals and health systems typically assert that buying another hospital will lead to higher-quality care and lower costs for consumers and taxpayers. But the data proves otherwise. 
• One of the primary reasons hospital consolidation leads to higher prices is because it gives hospitals more leverage when they’re negotiating with health insurers to determine reimbursement rates.

Hospital consolidation is widely recognized as a main contributor to rising healthcare costs. It happens when one hospital acquires another, or when a large health system that owns many hospitals adds to its portfolio by buying even more hospitals and outpatient clinics. 

It’s likely something you hear about only when it’s happening to a hospital in your community, but across the U.S., hospitals have been on a massive buying spree for decades. According to a January 2026 report from the Bipartisan Policy Center, the share of hospitals operating independently declined from about 90% in 1970 to 32% in 2019.¹

Hospitals and health systems typically assert that buying another hospital will lead to higher-quality care and lower costs for consumers and taxpayers. But the data proves otherwise. 

• The Bipartisan Policy Center report noted that “a substantial body of research shows that provider consolidation leads to significantly higher prices — to the detriment of patients and the health system at large.”¹ 
• The Department of Health and Human Services (HHS) released data in 2025 showing that hospital-to-hospital mergers in concentrated markets can raise hospital prices from 6% to 65%. HHS also found that hospitals’ acquisition of physician practices can lead to a 14% average increase in prices for physicians’ services.²

One of the primary reasons hospital consolidation leads to higher prices is because it gives hospitals more leverage when they’re negotiating with health insurers to determine reimbursement rates. 

• When one hospital buys another, it typically means the hospitals in a given market face less competition. 
• It also often leads to the market becoming concentrated, meaning people in need of hospital care have limited choices in where to receive that care. 
• It’s far easier for a hospital or health system to pressure health insurers to pay higher rates in concentrated markets where they face less competition. 
• And a Commonwealth Fund report found that about 90% of U.S. hospital markets are classified as “highly concentrated.”³
• In these types of markets, insurers know their members will be frustrated if a hospital leaves the network, especially if just one or two other hospitals would remain in-network. And in some cases, insurers are required to keep a hospital in the network as without it, they would no longer meet the federal or state government’s network adequacy standards.
• This effectively gives the acquired hospital the upper hand in the negotiations, making it easier to secure higher reimbursement rates. Those higher rates make it more expensive when people get care at that hospital, and this eventually translates into higher premiums for consumers.

If you asked your friends and neighbors if they were aware that hospitals have been hiking their prices and making it more expensive for people to get the care they need, they’d most likely say no. 

• Many Americans view their local hospital in a positive light. After all, that’s where some of the most significant moments of their lives take place such as having a baby, recovering from a significant health challenge, or losing an elderly parent or grandparent. 
• Hospitals are also typically significant contributors to the local economy and a primary employer in the cities where they’re located, both of which help to boost their reputation.
• Hospitals have leveraged their positive reputations to blame health insurers for rising healthcare costs, a strategy that’s proven effective for them. By scapegoating insurers, they know the public is less likely to take notice when they increase their prices. 
• Their price increases are also easier to conceal because of the lack of transparency in healthcare costs. It’s not always easy for people to understand the total cost of the care they received during a hospitalization. And most people don’t get care in the hospital every year, so they’re less likely to notice as hospitals raise their prices.

While you can’t control the prices that hospitals in your area charge, it is possible to save money on the care you and your family need. Check out this article for tips to save money on healthcare throughout the year.

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