A cancer patient might live in a town with four oncology groups, but only one accepts his insurance — the one owned by his insurer. A young couple could see huge bills after their child is born, because their insurer agreed to the health system’s rates in exchange for a contract with obstetricians across the country. A woman might have to pay a big sum she can’t afford for basic lab tests at a hospital — inflated rates her insurer accepted so its customers have access to the system’s children’s hospital elsewhere in the state.
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And even well-insured patients receive unaffordable bills in this era of high-deductible health plans, narrow insurance networks, and 20% cost sharing.
Health systems, doctor groups, and insurers are merging and coalescing into ever-bigger giants. While these mergers are good for business, studies show the escalating consolidation in health care is driving up prices, harming patient outcomes, and decreasing choice for people who need care. A recent study found that six years after hospitals acquired other hospitals, they had raised prices by 12.9%, with hospitals that engaged in multiple acquisitions raising their prices by 16.3%.
These new deals are “mutually enforced monopolization,” said Barak Richman, the Alexander Hamilton professor of business law at George Washington University. “It’s not competition. It’s more like collusion. They don’t care about price.”
Those market factors contributed to a landscape where a dose of the antiviral Paxlovid given in a hospital costs $4,500; magnetic resonance imaging costs $15,000; and joint replacements cost $100,000.
President Donald Trump has talked about the burden of health care costs since his first campaign, but he has signaled that his administration’s regulators are less inclined than his predecessor’s to intervene in health mergers.
This summer, he revoked President Joe Biden’s 2021 directive that all federal agencies make sure markets remain competitive, reversing course from Biden’s more expansive interpretation of antitrust law. And in a scathing statement upon taking over the Federal Trade Commission, Trump-appointed chair Andrew Ferguson blasted his predecessor, Lina Khan, implying that she had overstepped the agency’s legal authority, as well as criticizing what he called her “clumsy” and “breathless” rhetoric and her focus on the incursion of private equity into health care.
What this will mean in practice is unclear.
In an interview with KFF Health News, Daniel Guarnera, the director of the FTC’s Bureau of Competition, said that the leadership at the FTC and the Justice Department has endorsed guidelines issued by the Biden administration, which he characterized as a “framing device” for companies contemplating a merger.
The expanded merger guidelines, issued in 2023, focused for the first time on a wide variety of new types of anti-competitive practices that had become common in health care, such as hospitals and private equity firms buying doctors’ practices and insurers owning what are known as specialty pharmacies to dispense complicated and often expensive drugs.
Guarnera noted that regulators’ strongest enforcement tool is convincing a judge that mergers violate the Clayton Antitrust Act, a statute that is the foundation of antitrust law. But administrations can interpret this statute differently, and it’s unclear what cases the Trump administration’s FTC will choose to bring.
“The Biden administration tried to be more innovative,” said Erin Fuse Brown, a professor of health services, policy, and practice at Brown University’s School of Public Health. “The Trump administration has signaled a more traditional approach — that it’s unwilling to push the envelope.”
In the battle for profits between insurers and providers, each side insists it needs to grow bigger to hold sway in the negotiations that determine health care prices. But evidence shows the prices that make sense in industry-level dealmaking have little to do with the actual value of the services involved. Instead, they’re merely a data point in large-scale calculations that, at best, reflect the power balance between opposing parties.
Under Trump, the FTC has already sued to block two mergers of medical-device makers and has continued the Biden administration’s challenges of individual drug patents.
“Helping improve the health care system though ensuring that there is more and better competition are very, very high priorities for us at the FTC,” Guarnera said, noting that health care has “enormous effects on both Americans’ pocketbooks as well as well-being.”
But it is far more difficult to take on the more massive entities, and though the number of new mergers dipped early this year as companies navigated the uncertain effects of tariffs and interest rates, consolidation continues.
A recent Becker’s Hospital Review article identified “28 large health systems growing bigger,” noting, “This is not an exhaustive list.”
For example, in May, Northwell Health of New York merged with Connecticut’s Nuvance to become a 28-hospital behemoth with over 1,000 outpatient clinics. That was a more traditional merger, where hospitals in the same region joined to extend their reach and increase their market power.
Meanwhile, companies are creating powerhouses not previously seen in health care, by racking up smaller purchases that aren’t expensive enough to trigger federal review. They include what are known as vertical mergers, which combine companies that provide different functions in the same industry — most commonly, hospital systems or insurers buying doctors’ practices or specialty pharmacies.
For instance, UnitedHealth Group, the world’s largest health care company, now owns health insurance plans; physician practices and other providers; data and analytics services; payment processors; a pharmacy benefits manager; and pharmacies themselves. Jonathan Kanter, the competition czar in Biden’s Justice Department, has likened the UnitedHealth amalgamation to Amazon.
Likewise, hospital systems and private companies — often private equity firms — are increasingly expanding their reach to different regions, gobbling up hospitals, medical practices, and surgery centers. This kind of consolidation, known as a cross-market merger, allows companies to accumulate huge collections of doctors — and significant market power — across the country in particular specialties, such as gastroenterology, ophthalmology, pediatrics, or obstetrics.
Research shows a change in ownership means a change in prices. While pediatrics and obstetrics have traditionally been poorly paid specialties, for instance, they represent a land of opportunity to investors because parents are willing to pay more when it comes to care for their kids.
It used to be relatively simple for regulators to discern when a hospital that merged with its nearby competitor gained monopoly power, rendering it anti-competitive and driving up prices. Health researchers say these new, more complicated types of deals, creating a more complex interplay between insurers and medical providers, have made that tipping point much harder to define.
In health care, even more traditional, vertical consolidation can be problematic, Richman said. “Economic theory says it could be innocuous, like a suit manufacturer opening a store, even though studies show in health care it’s dangerous — higher prices, poorer quality, less choice,” he said.
For example, patients who have Cigna health plans and need an array of more expensive, often injectable prescriptions must use Accredo, the specialty pharmacy the insurer bought in 2018, even though a different pharmacy may have a better price.
Economists have developed computer modeling to predict when patients will experience higher prices and less choice because of these new types of consolidation. But judges who could nix the transactions are so far “not convinced,” said Daniel Arnold, a health economist at Brown’s School of Public Health.
Experts such as Fuse Brown say new laws and enforcement tools are needed.
“The old laws,” she said, “are just not calibrated to the complexity and novel types of mergers.”
(KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs of KFF — the independent source for health policy research, polling and journalism.)
©2025 KFF Health News. Distributed by Tribune Content Agency, LLC.
