The concurrent trends of consolidation in the number of hospitals and healthcare providers nationwide and the growth in the amount of unpaid medical debt may be related to the concentration of healthcare providers in that area, according to the results of a new report, released last week by The Urban Institute.
When fewer hospitals are serving a market, prices rise, leaving patients with fewer affordable options. This not only increases the likelihood of incurring debt but also forces many to delay care, worsening both their health and financial situation.
By the numbers: In 2022, 27 million consumers had medical debt in collections on their credit reports. Rising health care costs, which have outpaced inflation, are linked to the growing dominance of a few providers in local markets. In fact, 90% of hospital markets in the U.S. were classified as highly concentrated in 2017, and this trend has only intensified.
- Monopoly hospitals charge 12% more than hospitals in competitive markets.
- Counties with higher hospital concentration saw slower declines in medical debt.
Zoom out: Counties experiencing larger increases in hospital market concentration (measured by the Herfindahl-Hirschman Index) saw smaller declines in the share of residents with medical debt. The correlation between changes in medical debt and hospital market concentration (0.2) is similar in magnitude to the correlation between medical debt and a county’s racial and ethnic makeup.
Real-world impact:
- Delaware County, Penn.: Hospital market concentration skyrocketed by 113% between 2012 and 2022, contributing to a 0.9 percentage point increase in the share of adults with medical debt in collections.
- Tuscaloosa County, Ala.: A 18.3% decline in hospital concentration over the same period led to an 18.7 percentage point drop in medical debt.
