Study Links Increased Hospital Acquisition of Private Practices to Rising Healthcare Costs

A recent study published as a working paper by the National Bureau of Economic Research reveals that the rapid accumulation of private physician practices by hospitals is contributing to higher healthcare prices across the United States. The research highlights a 71.5% increase in hospital ownership of private practices from 2008 to 2016, with nearly half of all private practices owned by hospitals by 2016. This trend complicates regulatory efforts to oversee the healthcare market, as most of these mergers occur below reporting thresholds.

The study demonstrates that when hospitals acquire private practices, both hospital and physician service prices tend to rise. For example, two years after an obstetrics-gynecology practice is bought by a hospital, prices for labor and delivery increase by $475, or 3.3%, while physician prices escalate by $502, a 15.1% increase. The findings suggest that reduced competition resulting from these mergers primarily drives these price increases, with practices already part of hospital systems experiencing a 9% rise in prices when they are involved in a new merger.

One of the challenges noted by the researchers is that a significant majority of these mergers are difficult to detect as they fall below the legal thresholds requiring reporting. Moving forward, policymakers are encouraged to scrutinize physician-hospital mergers more closely and consider ending financial incentives that encourage such consolidations. Recommendations include implementing site-neutral billing to reduce disparities in payment rates and requiring clearer evidence of benefits from mergers.

The researchers emphasize that more oversight is crucial, especially for mergers with considerable scope to diminish competition. State-level policies could also require hospitals and physicians to demonstrate the advantages of their transactions. Ultimately, this trend of hospital acquisitions raises concerns about increased healthcare costs and the need for stronger regulatory measures to maintain market competition.

Source: https://medicalxpress.com/news/2025-07-health-acquisition-private-physician.html