U.S. hospitals have increasingly consolidated over the past few decades, with mega-mergers leading the way. Now, some critics say that trend is driving medical care prices skyward.
According to a 2024 study led by the University of Chicago’s Harris School of Public Policy, 1,164 mergers were completed among the nation’s 5,000 acute-care medical centers between the years 2000 and 2020.
While hospital consolidations can expand access to medical services, deepen specialized medical service channels and give financially struggling medical centers much-needed breathing room, those mergers often lead to higher hospital care costs.
Thanks for subscribing!
The money news that actually matters.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
Data from the U.S. Department of Health and Human Services shows that hospital care prices can rise between 6% to 65% at merged medical centers. Meanwhile, the same study pegs a 14% service price hike with hospital acquisitions of physician practices.
The consolidation trend has led some hospital procedures to double in price at a time when U.S. health consumers struggle to meet the burgeoning cost of health insurance. That’s often the case for consumers who live in different zip codes and find costs can skyrocket at medical centers only a short drive away.
Take Catawba Valley Medical Center in Hickory, North Carolina. According to The Washington Post, citing data from San Francisco-based Serif Health, knee replacement procedures cost approximately $16,000. An hour down the road at Mission Hospital in Asheville, N.C., the cost of the surgery under the same health care plan is about $40,000, easily doubling the procedure’s price tag.
One big reason for the massive cost disparity is that Mission was formed by consolidating the two largest hospitals in the region, which has reduced medical center price competition in the greater Asheville region, The Post reported.
Higher prices come with the territory
Healthcare experts say one key component built into larger medical center mergers is that hospitals view consolidation as a way to manipulate pricing power with insurance companies, with quality care sometimes a lower priority.
“The quality defense for a merger is not supported by theory or evidence,” Mark Pauly and Lawton Robert Burns, both senior fellows at the University of Pennsylvania Leonard Davis Institute of Health Economics, said in a 2025 interview with the institute. “The only sure thing is that a merger will result in higher prices for the merged hospitals, not improved quality.”
The duo notes that higher prices come with the merger territory, “since a firm that gains more pricing power through a merger will not find it profitable to improve quality at the same time, even if it could.”
Additionally, negotiating power changes when hospitals merge, especially with health insurers.
“When two hospitals that previously competed for the same business end up under the same ownership, the insurer has fewer alternatives,” Jennifer Schaefer, founder and CEO at JS Benefits Group, in Newtown, Penn., told Moneywise. “If a health system controls enough hospitals and physicians in a market, an insurer may have a hard time offering a competitive network without including that system.”
In that scenario, healthcare pricing negotiation shifts for insurers, from “What rate do we need to offer to win this business?” to “What rate do we have to accept to keep this system in our network?”
“Those are completely different conversations, and only one of them ends in a discount,” Schaefer said.
The insurer pricing challenge also explains how the same procedure can have dramatically different negotiated prices an hour apart under the same insurer. “The procedure may be similar, but the negotiated rates can be very different,” Schaefer noted. The type of facility matters too. “A hospital outpatient department may charge a facility fee that an independent ambulatory surgery center does not,” she added.
Must Read
- Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
- The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes
Higher hospital costs also impact every healthcare consumer
Soaring merger-related medical procedure price tags go far beyond a hospital patient undergoing surgery. Those costs also impact anyone with health insurance. With an employer health plan, the chain is simple: negotiated hospital rates affect claims, claims affect plan costs, and those costs affect renewal and what employees pay.
“Nobody ever receives a bill that says ‘’hospital consolidation surcharge,” Schaefer said. “It arrives as a higher renewal. Then it arrives as a bigger paycheck deduction, a higher deductible, a narrower network, or a raise that quietly didn’t happen.”
Additionally, if you’re set to undergo a hospital medical procedure like a knee replacement, hernia repair or biopsy and are concerned about the price, do your homework ahead of time.
First, ask your hospital administrative contact for your procedure’s current procedural terminology (CPT) code; this five-digit code is commonly set by the American Medical Association and widely used in medical billing. Basically, CPT codes let healthcare insurers know what treatments or services a patient received so the provider can get paid.
“The CPT code matters most because it gives the patient and the insurer something specific to price,” Schaefer said. “Without knowing exactly what is being performed, a comparison isn’t meaningful.”
Also, don’t cut medical procedure costs so deeply that quality of care becomes a factor. “Avoid automatically choosing the cheapest facility,” Schaefer noted. “Price is one factor. Ask how frequently that facility performs that particular procedure and what quality information is available.”
You May Also Like
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change
Brian O'Connell is a US based former Wall Street bond trader and author of two best-selling books: "The 401k Millionaire" and "CNBC's Creating Wealth". His work is featured on national finance and business platforms like TheStreet.com, CBS News, CNN, The Wall Street Journal and Forbes
