Hospital Consolidation is Rising — And So Are Your Healthcare Costs

It’s an economic fact: when competition decreases, prices go up. That’s true in every industry — and healthcare is no exception.

A new Government Accountability Office (GAO) report confirms what many patients already feel in their wallets: hospital consolidation is fueling higher costs.

According to the GAO, independent physician practices are being rapidly absorbed by large hospital systems. Nearly half of all physicians now work directly for, or are affiliated with, hospital systems — up from less than 30 percent in 2012.

Why is this happening? Money. Consolidated practices can negotiate higher payment rates with insurers, which means higher premiums for patients and higher costs for taxpayers through Medicare and Medicaid. On top of that, when hospitals acquire practices, they often tack on “facility fees” — making everything from chemotherapy to a simple office visit more expensive.

The result: higher premiums, higher out-of-pocket costs, and higher taxes to fund government programs.

The only way to counter consolidation is to restore competition. In North Carolina, that means two things:

1. Reform Certificate of Need (CON) laws.
   CON laws act as a government permission slip, requiring new providers to prove “need” before opening. CON laws shield incumbents from competition. Independent practices should never be blocked from opening their doors. Let patients decide where to seek care, and let price and quality drive the market.

2. Eliminate physician noncompete agreements.
   Hospitals routinely require doctors to sign contracts preventing them from practicing elsewhere if they leave. These agreements create a monopoly on the workforce, making it nearly impossible for independent practices to recruit physicians in hospital-dominated areas. Ending mandatory noncompetes would free doctors to practice where patients need them most, allowing new practices to open and competition to increase.

The GAO report makes clear: consolidation isn’t slowing down. If anything, it’s accelerating. Without reforms, North Carolinians will face fewer choices, higher bills, and less control over their healthcare.

The solution is straightforward: break down the barriers that block competition, and costs will come down. Let patients, not hospital systems or the government, decide how and where care is delivered.