Are Mergers To Blame For Rising Medical Bills?

By: Anneken Tappe · June 12, 2024 · Reading Time: 2 minutes

Healthcare Consolidation

Surprisingly high medical bills can be a financial hurdle for many Americans. Consolidation in the industry could push prices up even more.

Over the past couple of decades, there have been more than 1,000 hospital mergers in the U.S., according to healthcare think tank KFF . And there are no signs of it slowing down.

Higher Costs, Same Care

What happens when hospitals merge? At its core, when there are fewer providers of a good or service, competition is eliminated, and consumers have to make do with the choices – and prices – available. This is no different when hospitals merge.

It’s not as simple as the number on a bill and the patients’ bank account either. Attached to this complicated equation are things like wages for staff, doctors and nurses, as well as the effect higher costs can have on insurance premiums in the long term.

Of course, mergers are also intended to improve services, introduce efficiencies, and help companies grow. In the healthcare world, they should lead to more efficient care for patients, for example.

Even so, between 2010 and 2015, hospital prices increased by more than 5% on average following major deals, according to a forthcoming paper in the American Economic Review: Insights that questions whether there isn’t enough antitrust enforcement in the U.S. healthcare sector. Case in point, The Federal Trade Commission (FTC), filed seven antitrust lawsuits challenging hospital mergers between 2021 and 2023 — more than half of the total challenges made in the two decades prior.

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