Hospital Acquisitions Drive Up Doctor Costs

A recent study by the National Bureau of Economic Research (NBER) finds that hospital acquisition of doctor’s offices is accelerating and leading to higher healthcare costs, without improvements in quality. Between 2008 and 2016, hospital-physician integration rose nearly 72%, and was associated with sudden, significant price increases. For example, childbirth-related physician costs rose by 15.1% and hospital costs by 3.3% within two years post-acquisition. The researchers argue this is due to reduced market competition, especially when hospitals with greater bargaining power acquire influential doctors.

Physician-hospital consolidation has been ongoing, driven by financial pressures on independent practices, including low reimbursements and high administrative burdens. As a result, over 75% of U.S. doctors now work for corporations, predominantly hospitals. Hospitals acquire practices to increase outpatient referrals, raise rates, and improve care coordination in value-based models. However, research consistently shows that consolidation can lead to worse outcomes—reduced care quality, lower physician income, and higher patient costs.

The NBER study, led by Yale researcher Zack Cooper, emphasizes that nearly all the mergers studied went unreported under current federal thresholds, making it difficult for regulators to identify or intervene in anti-competitive activity. Although newer FTC guidelines may help, experts believe regulators still lack the authority and resources needed.

The American Hospital Association (AHA) strongly criticized the study, calling it flawed and biased due to its reliance on old data from UnitedHealthcare, which also acquires physician practices. AHA contends the study ignores legitimate reasons doctors join hospitals and overlooks broader trends influencing physician employment.

Overall, the findings highlight concerns that increasing hospital ownership of medical practices, while offering operational benefits, may ultimately drive healthcare costs up without corresponding improvements in quality—raising red flags for policymakers and regulators.

Pifer, R. (2025, July 22). Hospitals are buying more doctor’s offices. That’s tied to higher costs, study finds. Healthcare Dive. https://www.healthcaredive.com/news/hospital-physician-consolidation-higher-prices-nber-research/753558/