Panel 7 — Are Hospitals Too Big?

This panel builds on the merger material from last class, so the book chapter and the Hospital Mergers and Competitiveness slides are the place to review. Here’s a list of questions to think about as you prepare. There’s nothing to turn in — the questions I put to the panel come from this list.

From the reading

You can find these in the chapter and slides.

1. How does competition among hospitals affect prices and quality, and how does the answer depend on whether prices are fixed (as in Medicare) or negotiated (as with private insurers)?
2. Why can a merger between nearby hospitals raise prices even if it does nothing to costs?
3. What does the empirical evidence on hospital mergers generally find?
4. What is vertical integration between physicians and hospitals, and why might it matter for competition?
5. How do economists measure competition and market power in a hospital market?

Bigger questions

No single right answer here — these are the ones we’ll talk through together.

1. Hospitals often say mergers help them cut costs and coordinate care. When should we believe that, and when should we be skeptical?
2. If a merger raises prices but also improves quality, how should a regulator weigh the two against each other?
3. “Too big” could mean too expensive, too powerful, or too hard to hold accountable. Which meaning worries you most?
4. Why might a rural community both need its hospital to survive and be worse off if it merges into a large system?
5. If you were the regulator deciding on a hospital merger, what would you most want to know before saying yes or no?

Your take

Have you noticed hospitals or clinics near you joining larger systems or changing names? Could you tell whether anything changed for patients? Anything from your own experience is welcome.

Beyond the textbook

Not required, but they’ll make the discussion current — skim one or two.

• Ten Things to Know About Consolidation in Health Care Provider Markets — KFF (2024). A plain-language summary of the evidence that provider consolidation tends to raise prices, with a section on antitrust enforcement.
• One or two health systems control inpatient care in nearly half of metro areas — KFF (2026). A data brief finding that most metropolitan inpatient hospital markets are now highly concentrated.
• FTC Sues to Block Novant Health’s Acquisition of Two Hospitals — Federal Trade Commission (2024). A real antitrust challenge to a hospital merger, showing how regulators weigh market power and prices.