Hospital Consolidation and Economic Efficiency: An Analytical Essay on Market Trends and Consumer Impact

Hospital consolidation in the United States has increased significantly as it rapidly expands nationwide, reshaping healthcare markets and challenging assumptions about economic efficiency. Based on RAND Hospital Data observations from 2015–2025 and a review of empirical studies on the effects of hospital consolidation, this analysis examines whether hospital mergers and acquisitions lead to clear efficiency gains or primarily boost market power. While economies of scale and administrative efficiencies often justify consolidation, quantitative research shows that hospital prices in highly concentrated markets rise by 11–54%, with minimal improvements in productivity or quality of care. These trends suggest that monopolistic pricing and informational asymmetries negate potential efficiency benefits. Additionally, geographic barriers and limited consumer mobility reinforce market failures, preventing effective competition. The essay argues that increased Federal Trade Commission scrutiny, through standardized efficiency assessments and price transparency reforms, is essential to ensure hospital consolidations promote economic efficiency and protect consumer welfare in the U.S. healthcare system.