Large health systems tighten grip on cities, leading to less competition
The hospital market consolidated significantly in metropolitan areas from 2015 to 2024, reducing competition as a smaller number of players tightened the grasp on healthcare, a report has found.
A KFF report released Friday found 80% of hospital markets in metropolitan areas became less competitive or were led by one health system during the decade-long period.
Consolidation has picked up speed as more hospitals in search of financial support and operational stability come together. The trend has elevated concerns about the fallout from less competition — increased prices, less access to care, and worries about patient safety and quality.
The concerns have led to federal scrutiny. The Federal Trade Commission has cracked down on several proposed mergers between providers in recent years, citing anticompetitive issues including increased cost of care. Despite those efforts, 65% of hospital markets, or 252 metropolitan areas, were more concentrated in 2024 than in 2015, the report found.
Inpatient care in 2024 was dominated by one or two health systems in 47% of metropolitan areas, according to the research. In 83% of metropolitan areas, one or two health systems controlled 75% of the inpatient market.
The report, which analyzed market competition for hospital care, was based on RAND Hospital Data and survey data from the American Hospital Association. It measured competition by three metrics: the share of metropolitan statistical areas controlled by a small number of health systems, the level of market concentration in metropolitan areas based on the Herfindahl-Hirschman Index and the share of hospitals affiliated with health systems over time.
Some health systems were the dominant player in multiple cities. For instance, Nashville, Tennessee-based HCA Healthcare had the leading market share in 19 metropolitan areas, followed by Chicago-based CommonSpirit Health with 11 areas and Renton, Washington-based Providence with 10 areas.
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