One or two health systems controlled the entire inpatient hospital care market in 47% of metropolitan areas in 2024, a March 27 KFF Health News report found.
The report analyzed RAND Hospital Data in 2024, which included 98% of non-federal general medical and surgical hospitals in U.S. metropolitan areas. It analyzed cost reports that were scaled up or down to reflect a 365-day period. The report also analyzed the Herfindahl-Hirschman Index, which is based on the number of participants in a market and their respective shares. The measure scales from zero, perfectly competitive, to 10,000, a monopoly market, and is grouped into three categories: not concentrated (HHI less than 1,000), moderately concentrated (1,000 to 1,800) and highly concentrated (HHI greater than 1,800). Read more about the methodology here.
Here are seven key findings:
1. In metropolitan statistical areas, 19% were controlled by a single health system and 27% were controlled by two systems in 2024.
2. In 79% of metropolitan markets with less than 200,000 population, one or two systems controlled the entire inpatient hospital care market. But in 54 out of 55 metropolitan areas with a population of at least 1 million people, the market was split among at least four systems. However, even in 14 of these metropolitan areas, one or two health systems controlled at least 75% of the market.
3. Nearly all metropolitan areas had highly concentrated markets for inpatient hospital care, and 80% of these areas became less competitive from 2015 to 2024, and 15% were controlled by one health system over the entire period.
4. Among hospitals, 69% are part of a larger system, up from 56% in 2010. A smaller share of rural hospitals are part of health systems at 53%, compared to 80% of urban hospitals.
5. Fifty-two percent of system-affiliated hospitals in 2024 were part of a system with at least 15 hospitals, and 19% were part of a system with at least 50 hospitals.
6. The average HHI increased 728 points in 65% of metropolitan areas. In markets not already controlled by one system, the market concentration may rise due to mergers and acquisitions, or hospital closures.
7. Consolidation allows providers to operate more efficiently and keep struggling providers from closing their doors in underserved areas, but it often reduces competition and can contribute to higher prices.
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