WASHINGTON, D.C., July 27, 2025
Hospital Ownership of Doctor Practices Fuels Healthcare Price Hikes
Hospitals buying doctor practices are a major driver of rising healthcare costs, a new study reveals.
Why are healthcare prices going up? Hospitals rapidly buying physician practices is a key reason, a study published by the National Bureau of Economic Research finds. Hospitals acquiring physician practices leads to higher prices for both hospital services and doctors’ fees.
- Hospitals’ acquisition of physician practices significantly increases healthcare costs.
- Between 2008 and 2016, hospital ownership of physician practices surged by over 71%.
- Price increases are linked to reduced competition following these mergers.
- Most physician-hospital mergers evade regulatory oversight due to low reported deal values.
A Surge in Hospital-Owned Practices
The trend is stark: from 2008 to 2016, the percentage of physician practices owned by hospitals jumped by 71.5%. By 2016, nearly half of all private practices were hospital-owned.
The Price Tag of Consolidation
When hospitals absorb private practices, patients feel the pinch. For instance, two years after a hospital buys an OB-GYN practice, the cost of labor and delivery rises by an average of $475, a 3.3% increase. Physician fees climb by $502, a substantial 15.1% jump.
Researchers pinpoint reduced competition as the culprit behind these price hikes. Evidence suggests that even physicians already affiliated with a hospital system see their prices increase by 9% when a new practice within that system merges. This suggests quality improvements are unlikely to explain the sudden price jump.
Matthew Grennan, Ph.D., an economics professor at Emory University and a study author, noted the broad impact. “In the context we study, hospital systems have acquired so many physician practices that a majority of physicians in the United States now work for hospitals,” Grennan stated.
Regulatory Blind Spots
These mergers often fly under the radar of regulators. An overwhelming 99.9% of physician-hospital mergers analyzed by the researchers had deal valuations below the thresholds requiring mandatory reporting under the Hart–Scott–Rodino Act.
Grennan added that the findings provide critical empirical support for economic theories. “This paper provides empirical evidence consistent with some of the leading theories for how these non-horizontal mergers can result in anticompetitive price increases,” he said. “As a result, I think economists and others in the antitrust community are likely to give more careful consideration to these potential sources of harm.”
The research team included experts from Yale University, the National Bureau of Economic Research, the University of Wisconsin, Madison, Harvard University, Emory University, and the University of California, San Francisco.
