How Vertical Integration Is Increasing Patient Bills and Limiting Choice

That example is a straightforward outcome of vertical integration: when one company controls multiple stages of care, it can route patients to higher-priced options it owns. Across the country, hospitals have been buying physician practices, surgery centers and imaging centers. Insurers have purchased practices and specialty pharmacies. Private equity firms often buy practices, restructure them, then sell to hospitals or insurers further up the chain.

Over the past decade the share of doctors employed by hospitals or corporate entities more than doubled. Today 82% of physicians work for hospitals, insurers, or private equity–backed groups. Large insurers have integrated clinical work directly: in 2024 UnitedHealth Group's then-CEO said the company employed about 10,000 primary care physicians, not counting roughly 80,000 "affiliated" physicians.

These ownership changes can reduce patient choice and raise prices in several concrete ways:

• Site-of-care steering: Patients are routed to facilities the owner controls, even when less intensive, cheaper alternatives are clinically appropriate.
• Pharmacy channel control: Insurers that own specialty or retail pharmacies may require patients to use them, even if the pharmacy lacks the prescribed drug or does not offer the lowest price.
• Consolidated bargaining power: Larger integrated entities can negotiate higher reimbursement rates with payers or extract higher facility fees when care is delivered in hospital-owned settings.

Department are responsible for policing mergers and protecting competition: the FTC generally oversees hospitals and doctors, while the Justice Department focuses on insurers. But enforcement tools are limited to warning letters, lawsuits, and consent decrees. Those remedies can be slow and resource-constrained, and many transactions fall below the reporting threshold set by the Hart-Scott-Rodino Act, meaning agencies may not even get advance notice.

Empirical studies cited in the reporting show that vertical integration often raises prices without improving health outcomes. Patients face higher bills when routine procedures are shifted to hospital settings and can have fewer pharmacy options. The restructure of practices by private equity can also prioritize financial efficiency over continuity of care.

• Ownership disclosures: Ask whether a doctor's office, surgery center or pharmacy is owned by a hospital or insurer.
• Site alternatives: Confirm whether a recommended procedure must be performed at a hospital or can be done in an office or independent surgery center.
• Pharmacy options: Compare prices and availability between in-network, insurer-owned pharmacies and independent pharmacies.

These steps won't eliminate the problem, but they can reduce surprise costs and preserve options when integrated entities push patients toward higher-cost services.