Reviving Competition in American Healthcare: A Path Forward

In American healthcare—where costs rise faster than inflation and patient access continues to erode—one barrier consistently undermines meaningful competition: outdated policies that fortify incumbents and suppress new entrants. Certificate of Need (CON) laws, entrenched hospital monopolies, and Medicare’s uneven approach to site-neutral payment reform aren’t just regulatory leftovers. They shape a marketplace where consolidation is rewarded, independence is penalized, and innovation has to fight for oxygen.

As 2025 closes with federal antitrust pressure building and state-level reform barely moving, physicians and independent practices increasingly find themselves navigating a landscape that nudges them toward absorption rather than autonomy.

At the center of this dynamic are CON laws—state mandates requiring approval before providers can expand services, acquire equipment, or open new facilities. Originally introduced in the 1970s to curb unnecessary growth and help contain costs, these laws have, in many states, evolved into protective shields for dominant hospital systems. In places like West Virginia, where a Republican supermajority recently blocked a repeal attempt, hospitals retain de facto veto authority over potential competitors.

The result is a system that has more in common with state-managed market control than with competitive healthcare. Ambulatory surgery centers, specialty clinics, and independent practices must endure long, expensive application processes—processes that favor organizations with political leverage, capital reserves, and legal teams. The Government Accountability Office (GAO) illustrates the consequences vividly: between 2012 and 2022, physician-owned private practices dropped from 60% to 44%, as many were absorbed into hospital systems seeking to consolidate referral streams and negotiate higher rates with insurers.

This wave of consolidation is not benign. It directly correlates with higher prices. Hospitals—many formally classified as nonprofits despite consistently strong margins—charge substantially more for identical services when those services are billed under hospital outpatient designations. Medicare’s partial and inconsistent implementation of the site-neutral payment policy deepens the divide. A chemotherapy infusion reimbursed at roughly $1,000 in a physician office can command nearly $3,000 in a hospital outpatient department. This discrepancy creates an irresistible financial incentive for health systems to acquire independent practices to shift care “under the hospital license.”

Kaufman Hall’s 2025 analysis warns that without broader site-neutral reforms, these incentives could push national healthcare spending up by an additional $100 billion over the next decade. And because hospital rates set the tone for commercial payers, the ripple effects extend well beyond Medicare.

Physicians, meanwhile, bear both the financial and professional consequences. Independent practitioners already facing administrative strain and shrinking margins now risk exclusion from local markets entirely. In the Carolinas, recent mergers have reduced competing hospital systems in rural regions by 20% since 2019, contributing to longer wait times and fewer options for patients managing chronic conditions. Holland & Knight’s antitrust reporting notes an uptick in FTC challenges over the past year, but oversight remains inconsistent: only about 15% of proposed mergers received substantive scrutiny.

This shift has implications beyond economics. Employed physicians consistently report higher burnout rates—often 20–30% higher—driven by productivity metrics and corporate targets that leave little room for individualized patient care.

The irony is difficult to ignore. Policies originally aimed at improving equity and access have, in many cases, entrenched inequities. West Virginia, for example, still maintains CON restrictions yet spends roughly 15% more per capita on healthcare than the national average. Despite that, only 72% of residents live within 30 minutes of a primary care provider.

Policy proposals exist. Think tanks have floated models tying federal rural health funding to the removal of CON barriers, or requiring Medicare and Medicaid to implement full site-neutral payment baselines no later than 2027. There is bipartisan interest—Goodwin’s Q2 2025 antitrust review hints at growing legislative appetite—but hospital lobby influence remains a powerful counterweight. Without stronger FTC guardrails on “roll-up” acquisitions, where small practices are purchased quietly and pieced together into regional monopolies, change will be slow and uneven.

Reviving genuine market competition will require more than patchwork adjustments. States that still cling to CON frameworks should consider repeal or at least substantial modernization. CMS must accelerate site-neutral payment reform to eliminate incentives that artificially inflate costs. And federal antitrust authorities need clearer standards and stronger tools to confront stealth consolidation strategies.

Together, these steps could unlock an estimated $50–70 billion in annual savings while restoring space for independent physicians to innovate, compete, and deliver care on their own terms.

Because the core problem isn’t simply the price of healthcare. It’s the absence of alternatives. And until policymakers prioritize open markets over entrenched interests, American healthcare will continue to operate as a monopoly disguised as a competitive system.