The Baleful Influence Of Hospital Consolidations

Hospitals continue to consolidate into health systems which have and use their pricing power to increase medical costs well beyond inflation rates and also drive down the wages of medical workers.  From the recent HHS Consolidation in Health Care Markets RFI Response:

"In 1990, 65% of Metropolitan Statistical Areas (MSAs) in the country were considered highly concentrated for hospital services; by 2006, the share had increased to 77%, and by 2016, it was 90%.  Consolidation trends have continued to this day.  A study of 183 MSAs found that between 2017 and 2021, hospital system concentration rose in nearly 70% of MSAs and prices rose in 98%."

This pricing power is now attracting the private equity vultures who are always seeking above market returns.  Those above market returns come directly out of your health care insurance premiums and unreimbursed medical costs.

Peter Pitts discusses the baleful influence of hospital consolidations in a RealClearHealth opinion piece, using ProPublica's Sick in A Hospital Town Series as an exemplar:

https://www.realclearhealth.com/articles/2025/12/15/the_hospital_that_swallowed_albany_1153474.html

https://www.hhs.gov/sites/default/files/hhs-consolidation-health-care-markets-rfi-response-report.pdf

https://projects.propublica.org/albany-georgia-hospital/

The Hospital that Swallowed Albany
By Peter Pitts - December 15, 2025

In Albany, Georgia, the troubling rise of Phoebe Putney Health System (PPHS) is a four-alarm warning. ProPublica’s series “Sick in a Hospital Town” shows how one system can grow with no real checks or balances, shaping care to its own commercial interests by leveraging local politics and the local economy. This is a story about a national bellwether. Hospitals keep merging keep across the country while those responsible for stopping bad deals often stand back. PPHS began as a small-town hospital. Now it runs almost every health care service in the area, and the trend is coming to a hospital near you.

A key question is, why do so few federal enforcement actions target hospital mergers? Why do federal watchdogs let so many hospital deals slide while they tear apart other health care mergers? The Federal Trade Commission (FTC) and the Department of Justice (DOJ) both have clear power to fight hospital mergers, yet they rarely use it. One industry review found that out of more than a thousand hospital mergers in two decades, the FTC challenged only about 1%—even though 20% showed clear warning signs for harm to competition. That is more than a missed chance. It is a pattern that makes patients, employers, and taxpayers pay more for care that often does not improve post-acquisition.

The truth is a harsh mistress, and the data tell a blunt story. After hospital mergers, prices rise. A meta-analysis by the American College of Surgeons found that in 93% of cases, hospital charges went up after a merger. Another study found that prices rose by an average of 1.6% in the first two years after a merger and when hospitals in different markets joined forces, prices jumped almost 13% over six years. These are not small shifts. For families already strained by health bills, every extra dollar hits hard.

Backers of hospital mergers often promise lower costs and better care. The record does not support that claim. Studies show that mergers raise costs or leave them stuck at the same high-water mark. Bluntly put, real gains in quality rarely follow mergers. The reality is that patients are left with fewer real choices and local doctors lose their professional independence. The Albany situation, as ProPublica showed, is instructive. Phoebe Putney’s grip leaves patients with nowhere else to turn. PPHS dominance controls local politics and makes it hard for anyone in town to push back.

Meanwhile, other parts of our healthcare system face far more robust regulatory oversight. When insurance firms or pharmaceutical companies try to merge, regulators often jump in – publicly and aggressively. They hold hearings, demand changes, and often block deals outright. We have to ask ourselves, why do other mergers in the health care space get intense review while hospitals get a free pass, leading to higher costs for consumers, employers, and government programs? Part of the answer sits in how hospitals frame their work. They say they serve the public good, and in many ways they do, but that claim should not shield them from the rules that keep quality high, markets fair, and prices in check. In a recent Washington Times piece, Michael Toth warns of what can happen when leaders act as if the system is in safe and steady hands. It’s not.

The stakes keep rising. Case in point -- private equity firms now see hospitals as prime targets. In early 2025, private equity health care deals hit a new high even as lawmakers in more than a dozen states pushed for stricter oversight. Some states, like Massachusetts, now force hospitals to report deals before they happen. But state action can only go so far. Without strong federal enforcement, hospital systems will keep on growing, local towns will keep losing control, healthcare professionals will lose their ability to practice medicine as they see fit, and patients will suffer the consequences.

Not surprisingly, the American Hospital Association pushes back against reality, claiming that the research is flawed or biased, but the proof is in the pudding. Hospital consolidation raises prices and cuts choice. Fortunately, after years of weak action, the FTC has begun to take notice, recently blocking a hospital deal in North Carolina and updating its merger rules.

If we want to ensure patient access to high quality hospital services, we need to ask hard questions. Why do hospital mergers still get a pass when the costs and consequences sit in plain view? Why do regulators act only after the damage is done? The story of Albany, Georgia, should serve as a blunt wake-up call. When one hospital system controls a town, everyone pays the price.

It's time for federal regulators to step up. Patients deserve real competition, fair prices, and a health care system that puts their needs first. We should not wait for another town to lose its choices before we act.

Peter J. Pitts is President of the Center for Medicine in the Public Interest and a former FDA Associate Commissioner.