Consolidation in the U.S. healthcare industry, known as vertical integration, is increasingly resulting in patients being directed toward more expensive treatment locations and pharmacies owned by their healthcare providers or insurers. This trend occurs as hospitals and insurance companies acquire physician practices, surgery centers, and specialty pharmacies, allowing one parent company to control multiple stages of a patient's medical care.
Vertical integration has accelerated over the last decade, with the number of physicians employed by hospitals or corporate entities more than doubling. Currently, 82% of U.S. physicians work for hospitals, insurers, or private equity firms rather than in private practice. While proponents often cite increased efficiency as a benefit of these mergers, a study published in Management Science indicated that such acquisitions can lead to higher prices and no improvement in health outcomes, often prioritizing "operational throughput" over patient care.
In one instance reported by KFF Health News, a patient in Ohio seeking a polyp removal was directed by her doctor’s office to a freestanding surgery center owned by the same health system. The system had acquired the OB-GYN practice in 2025. Although the procedure was medically eligible for an in-office setting at an estimated cost of $3,000, the final bill at the surgery center was approximately $6,000. In the insurance sector, large companies like CVS, Cigna, and UnitedHealth have merged with pharmacy benefit managers and specialty pharmacies, often requiring members to use wholly-owned subsidiaries that may not offer the lowest prices.
For an individual patient, this trend results in concrete changes to medical bills and out-of-pocket costs. A person may find that a routine procedure formerly performed in a doctor's office is relocated to a hospital or surgery center, potentially doubling the cost. Furthermore, patients using specialty medications may discover their insurer no longer counts manufacturer copay assistance toward their annual deductible—a practice described by one Florida patient as "double-dipping"—which can result in thousands of dollars in unexpected costs before insurance coverage begins.
The trend also has knock-on effects for the broader insurance market and pharmacy competition. When insurers own the pharmacy benefit managers and the pharmacies themselves, they can mandate where patients shop, potentially sidelining independent pharmacies or lower-cost alternatives like Mark Cuban’s Cost Plus Drugs. To address these price disparities, federal regulators are reviewing "site-neutral payment" proposals, which would mandate that providers receive the same payment for a service regardless of the venue. The Trump administration proposed such reforms for some Medicare services in July, and the FTC is currently advocating for similar pro-competitive regulations through the Office of Management and Budget.
The FTC has intensified its scrutiny, bringing eight actions against healthcare acquisitions during President Trump's second term. Recent settlements in 2026 with pharmacy benefit managers like Caremark and Express Scripts aim to increase transparency and choice for patients and pharmacies. However, regulators acknowledge that they often rely on news reports and complaints to identify smaller mergers that have already been finalized. Future policy will likely depend on whether site-neutral payment regulations are formally adopted and how the DOJ and FTC address the backlog of smaller, non-reported acquisitions.