The market forces quietly adding thousands to patient bills

Anne Hug, a professor of radiology, learned she had a polyp in her uterus after a failed round of IVF. Her doctor initially planned to remove it in a hospital operating room with anesthesia, estimating the cost at $18,000. However, Hug refused to pay such a high price and sought an alternative.

She found an obstetrician who agreed to perform the procedure in his office with local anesthesia. Hug took the required hormone course but was later informed that the doctor's office had to do the surgery in a freestanding surgery center owned by the same health system. The health system had acquired the OB-GYN practice in 2025, giving it control over the procedure's location and cost. Hug ended up paying around $6,000 for the in-office procedure, despite the hospital's recommendation not to.

This experience exemplifies the consequences of healthcare vertical integration, where one company owns multiple parts of the supply chain and can direct patients to more expensive treatment options. Hospitals are buying doctors' practices, surgery centers, and imaging centers, while insurers are acquiring doctors' practices, specialty pharmacies, and even merging with pharmacy chains. Private equity firms are also involved in these deals, often selling them to companies higher up the healthcare food chain for a profit.

The stated purpose of these mergers is often greater efficiency, but studies have shown that patients typically face higher prices with no benefit or even worse health outcomes. This is partly because the purchases are driven by financial efficiency rather than providing more seamless and attentive care. Moreover, these transactions occur in a gray zone of competition law, and regulators' tools to examine or stop them are slow and under-resourced.

Antitrust laws are inadequate, and the agencies responsible for enforcing them are under-resourced. The Federal Trade Commission and the Justice Department primarily oversee mergers in healthcare to protect competition and patient choice. However, many hospital mergers or insurer mergers fall below the reporting threshold required by the 1976 Hart-Scott-Rodino Act, leading to consolidation and monopoly through slow accretion.

In 2024, UnitedHealth Group's CEO revealed that the company employed around 10,000 primary care physicians, not including its affiliated physicians. Many of these vertical transactions are too small to be noticed by the regulatory agencies. The FTC has brought only eight actions or suits against healthcare mergers and acquisitions in President Trump's second term, indicating that the agency is struggling to keep up with the rapid pace of dealmaking.