Healthcare prices have steadily risen over the last 20 years as hospitals continue to consolidate physician practices across the country, with hospitals driving a third of overall costs, according to an April 2026 report by Paragon Health Institute,
The report analyzed independent research, MedPAC annual reports to Congress, cost of living baseline projections and other data from the Bureau of Labor Statistics and the U.S. Census Bureau to evaluate the hospitals acquisitions’ impacts on rising healthcare costs in the U.S.
The paper highlights policies and other market levers for managing the rise in costs. It also found that ASCs are emerging as one of healthcare’s fastest-growing competitors.
Here are nine takeaways from the report:
1. The share of physicians employed by hospitals rose from 26% in 2012 to more than 55% by 2024.
2. The number of primary care physicians affiliated with hospitals rose from 28% in 2009 to 48% in 2022.
3. Medicare spent an average $114,000 in additional payment per physician per year when a physician was integrated into a hospital system instead of remaining in independent practice, with physicians and hospitals splitting the higher revenue.
4. Average commercial insurer payments were 2.5 times that of Medicare rates between 2020 and 2022, indicating that hospital acquisitions compound revenue advantage across all payers.
5. The average Medicare payment for a colonoscopy with biopsy at an ASC is $805, compared with $1,371 in a hospital outpatient department — a 70% premium for the same procedure.
6. Multiple studies cited in the report found consistent price increases when hospitals acquired physician practices. For example, one study of physician practice between 2010 and 2016 found a 17% increase in office visit prices following hospital acquisition.
7. Horizontal consolidation — i.e., hospital mergers — also raises prices. Mergers within a market raised prices between 20-50%, according to the report, and mergers across markets were found to increase prices between 6-17%.
8. In 2022, 68% of hospitals were part of larger systems, up from 53% in 2005.
9. ASCs offer structural advantages in this environment, but also face stiff competition. Between 2008 and 2024, medical building construction, including ASC-type facilities, rose 84% from $12 billion to $21 billion in constant dollars. Hospital construction fell 27% during the same period, from $35 billion to $26 billion. By 2024, spending on both was nearly equal.
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