One or two health systems controlled the entire market for inpatient care in nearly half of U.S. metropolitan areas in 2024, marking a sharp intensification of hospital consolidation over the past decade.

Nearly 80 percent of hospital markets in metropolitan areas became less competitive from 2015 to 2024 or were controlled by one health system over that entire period, according to a March analysis by the health care analytics group KFF.

By 2024, patients in 47 percent of U.S. cities had only one or two hospital systems to choose from.

Sixty-nine percent of U.S. hospitals were system-affiliated in 2024, up from 56 percent in 2010. The share grew to 53 percent in rural areas and 88 percent in urban settings.

Also, the share of independent hospitals has plummeted from about 90 percent in 1970 to 33 percent in 2019, according to testimony presented to the Senate in 2023.

Consolidation can occur horizontally or vertically.

Horizontal consolidation occurs when one hospital or health system merges with or acquires another hospital. Vertical consolidation is when a health system acquires other parts of the care chain, notably physician practices or outpatient centers, according to the Bipartisan Policy Center.

Impact

Horizontal hospital mergers can raise hospital prices from 6 percent to 65 percent, according to a 2025 report from the Department of Health and Human Services.

Vertical integration can lead to a 14 percent price increase on average for physicians’ services. Price hikes for physician services are higher when the acquiring hospital system is larger.

A 2025 report from the Government Accountability Office also states that seeing doctors for common elective surgeries in hospital outpatient departments costs more than seeing doctors in private offices.

From 2005 to 2024, overall hospital prices increased by 61 percent based on KFF analysis of the producer price index.

Inpatient prices have swelled by 35 percent in 2024 compared with a decade ago, exceeding the inflation rate of 32.42 percent during the same period, with private insurance prices leading the growth by 42 percent.

Sixty-one percent of Americans say they worry a great deal about the availability and affordability of health care, more than the economy, inflation, and any other domestic issue, according to a Gallup survey on April 7.

National spending on health increased to nearly $5.3 trillion and 18 percent of gross domestic product in 2024, up from $74.1 billion in 1970, according to data from the Peterson-KFF Health System Tracker.

Hospital care accounted for nearly one-third of national health expenditures in 2024, and grew more quickly than national health expenditures overall.

Consolidation may allow providers to operate more efficiently and help struggling providers keep their doors open in underserved areas, but it often reduces competition, according to KFF.

Policymakers have pursued several policy options to address health care consolidation. The U.S. government has also taken action to block noncompete agreements.

Legal Battle

In a March 2026 lawsuit, the Justice Department sued New York–Presbyterian Hospital, alleging that the hospital used its dominant market power to engage in anticompetitive practices.

The lawsuit claims that New York–Presbyterian used contract restrictions to prevent insurance companies from offering budget-conscious plans, which would otherwise steer patients toward more affordable competitors.

New York–Presbyterian is the largest hospital system in New York City and operates eight general hospitals, including four in the borough of Manhattan.

In 2023, the hospital blocked an insurance company from moving outpatient colonoscopies to a different provider, noting that keeping those procedures at New York–Presbyterian was worth $250,000 to the hospital system, according to the lawsuit.

One internal analysis estimated that if insurers were allowed to use tiered plans—charging patients lower copays or fees if they chose a preferred, lower-cost hospital—New York–Presbyterian’s profits could drop by hundreds of millions of dollars, the complaint states.

“Millions of New Yorkers pay more for healthcare because of these anticompetitive practices,” then-Attorney General Pam Bondi said in a March 26 statement. “At the direction of President [Donald] Trump, this Justice Department will fight relentlessly to ensure that Americans get the healthcare they need without facing exorbitant costs.”

Potential Benefit

Beyond the impact of consolidation on prices and competitiveness, a 2021 study found that for rural facilities, hospital mergers were associated with better mortality outcomes for certain conditions, such as acute myocardial infarction.

A 2024 report commissioned by the Coalition to Strengthen America’s Healthcare states that rural hospitals that align with a larger provider can improve their operating margins. Average total margins for rural hospitals were 1.5 percent before affiliation and rose to 2.2 percent after.

The report found that one in three rural hospitals that were at high risk of closure were no longer high-risk following a merger or acquisition.

Although not necessarily the right choice for all hospitals and communities, aligning with a larger health system can offer a lifeline for rural hospitals to protect patients’ access to critical care around the clock, the authors of the report acknowledged.