Just the Facts on Health Care Consolidation

There are few issues more complex and personal than health care. This is what makes health care reform so tricky and politically nuanced. When windows for reform open, policymakers get bombarded with academic research, think tank analyses, and views from stakeholders. With only so many hours in the day, and often limited resources or bandwidth, a decision-maker can be put in the unenviable position of trying to sift through the incoming information without a strong, unbiased foundation upon which to make a policy decision.

Just the Facts briefs are clear, concise syntheses of the most rigorous research on timely health care policy topics, published by the Health Care Affordability Lab at Yale. The goal is to give policymakers and other interested readers a reliable, unbiased foundation for understanding the questions at the center of health care reform, rather than advancing an agenda or offering policy recommendations. Each brief distills the findings of leading scholars to clarify where the evidence points and where uncertainty remains, with all references explicitly cited. You can find all of our Just the Facts briefs here on our website.

Just the Facts on Health Care Consolidation

Our two latest briefs tackle one of the most consequential forces reshaping U.S. health care markets: consolidation. They approach it from two complementary angles. The first, Horizontal Mergers Among Hospitals and Providers, examines what happens when competitors combine—one hospital buying another, or one physician group merging with a rival. The second, Vertical Integration, examines what happens when firms at different stages of the health care supply chain come under common ownership—hospitals acquiring physicians, insurers acquiring providers, and insurers integrating with pharmacy benefit managers (PBMs) and pharmacies. Read together, they offer an evidence-based look at how the structure of provider and insurer markets shapes the prices, quality, and value that patients and payers ultimately experience.

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Both trends have accelerated dramatically over the past two decades, and both now sit at the center of federal and state policy debates. Since 2000, more than 1,300 hospital mergers have occurred among the nation's roughly 5,000 hospitals—and today 21 percent of hospitals are effectively monopolies, with another 24 percent facing just one competitor. Over the same period, the supply chain has been knitting itself together vertically: the share of physicians integrated with hospitals rose by more than 70 percent between 2008 and 2016, insurers have become major employers of physicians (the largest private health insurer employs or affiliates with about 1 in 10 U.S. physicians), and the three largest PBMs—each owned by an insurer with its own pharmacies—now manage nearly 80 percent of all prescription drug claims. From merger enforcement to the PBM provisions of the Consolidated Appropriations Act of 2026 and the wave of state PBM reform laws, policymakers are actively grappling with both forms of consolidation.

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As with all of our briefs, rather than synthesizing every study on these topics, we focus on the subset of research that takes the most empirically rigorous approach. Across both briefs, the evidence converges on a consistent theme: consolidation raises prices with little evidence that it improves clinical quality, even as its effects on competition and efficiency vary by deal and by market.

Horizontal Mergers Among Hospitals and Providers

Drawing on two decades of research on hospital and physician mergers, this brief identifies six key findings:

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1. In more concentrated markets, hospital and physician prices are higher, and quality is generally lower.
2. Mergers of hospitals that compete for patients lead to higher prices without evidence of improving quality.
3. Mergers between hospitals in different geographic markets increase prices.
4. Mergers of physician groups that compete for patients increase prices, but the effects can differ by payer.
5. Hospital mergers that raise health care prices harm local labor markets.
6. The Federal Trade Commission’s merger enforcement actions are cost-effective but underused.

Vertical Integration

Drawing on the growing literature on common ownership across the health care supply chain, this brief identifies three key findings:

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1. Hospital acquisitions of physician practices lead to higher prices and dampened competition with little evidence of clinical quality improvements.
2. The research on insurer-provider integration is relatively small but growing, and the most rigorous evidence finds that insurer acquisitions of providers can enable regulatory gaming, along with anticompetitive effects in larger deals and modest efficiency gains in isolated cases.
3. Insurer-PBM-pharmacy integration raises rivals’ costs and enables regulatory gaming in Medicare Part D, with mixed evidence on consumer benefit.

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To unpack these findings, read our Just the Facts brief on horizontal mergers here and on vertical integration here.

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