Highly concentrated—and, by extension, less economically competitive—hospital markets are ubiquitous across the country and the norm in rural states Wyoming, North Dakota and South Dakota, according to a market analysis tool unveiled this week by Yale University’s recently launched Health Care Affordability Lab.
Every hospital in those three states operates in a market deemed to be highly concentrated or even monopolistic based on their Herfindahl-Hirschman Index (HHI), a metric used by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to determine when it should intervene in a deal on competitive grounds.
More broadly, the tool shows that 94% of the nation’s hospitals operate in markets with HHIs above 1,800, reflecting a highly concentrated market.
This type of market concentration—fueled by more than 1,300 mergers within the past 20 years—is a key factor in rising healthcare spending, as these hospitals lack competitive pressure to limit prices, according to the lab’s experts.
Specifically, according to the tool, South Dakota has 23 hospitals in highly concentrated markets and 30 in a monopolized market, North Dakota has 12 high-concentration hospitals and 36 monopoly hospitals, and Wyoming has seven high-concentration hospitals and 21 monopoly hospitals.
Other states with substantial market concentration are Montana (98.4% of 62 total hospitals), Maine (97.4% of 38 total hospitals), West Virginia (87.2% of 47 total hospitals), Vermont (86.7% of 15 total hospitals), Idaho (86% of 43 total hospitals) and Alaska (85.7% of 21 total hospitals).
On the other end of the spectrum, all six hospitals in the District of Columbia and all but one in Rhode Island are deemed to operate in moderate or lower concentration markets. Other competitive states included New Jersey (21.1% of 71 total hospitals in concentrated markets), California (26.8% of 347 total hospitals) and Maryland (30.2% of 43 total hospitals).
The lab noted that its calculation of HHIs follows those of the FTC and DOJ but that its geographic definition of a healthcare market (30-minute travel time) differs from that outlined in statute to determine a “relevant antitrust market.” The change, according to the lab, “reflects our best effort to approximate a reasonable choice set for patients and does not necessarily represent the relevant market for antitrust enforcement.”
Alongside national and state-level concentration, the lab’s publicly available visualization tool lets users review historical hospital mergers and see whether they did or did not produce a post-merger HHI above 1,800. Of the 1,331 cumulative mergers struck from 2000 to 2025, 429 (32%) met that threshold—yet only 13 transactions garnered enforcement action from the FTC.
Further, over the same period, 55% of the nations hospitals operated in markets that were significantly impacted (defined as an HHI increase of more than 100 points) by a merger and or closure, while another 16% operated in markets where a persistent monopoly was maintained.
The new tool—as well as the Health Care Affordability Lab, which is part of Yale’s Tobin Center for Economic Policy—is intended to be clear resource for regulators, policymakers and the public to understand the factors driving higher spending on healthcare.
As such, “we need to do two things at once: Generate world-class research rooted in academic rigor and transparent methods, and translate and deliver that research to policymakers through communication, engagement and the development of practical tools that can aid informed decision-making,” Zack Cooper, Ph.D, director of the lab as well as an associate professor at the Yale School of Public Health and in the Department of Economics, said in a release.
“We actually know a lot about what we can do to bring down healthcare costs and provide families with relief,” he said. “Where we’ve come up short is our ability to communicate what we know to those who can use the information to fix the system.”
A clear example of the tool’s practical use is a forecasting feature that allows users to simulate how hospital ownership changes could impact a market’s concentration. To illustrate its use, the lab outlined in a commentary post six recent proposed hospital mergers and their likely market outcomes.
Three of the proposed deals—MultiCare’s acquisition of Samaritan Health, UPMC’s acquisition of Trinity Health System and Parkview Health’s acquisition of Goshen Health—were estimated using the tool not to have an effect on any hospital markets’ HHIs. One proposed deal, Prime Healthcare’s acquisition of Franciscan Health Olympia Fields, is expected to meaningfully decrease HHI for 12 hospitals in Illinois and Indiana.
More problematic for the lab were WVU Medicine’s proposed acquisition of Independence Health and OhioHealth’s proposed purchase of Fairfield Medical. The former is expected to increase HHI in three separate Pennsylvania hospitals already operating in high-concentration markets. The latter would affect market concentration for any of the organizations directly involved in the transaction, but would do so for another nearby hospital (Diley Ridge Medical Center).
Beyond the new tool, the lab said it also hopes to cut through the “conflicting studies, technical jargon and industry spin” of health policy debates by releasing informational memos with “clear concise syntheses of what the most credible research says about the most pressing policy questions.” The first of these memos (PDF), which do not include specific policy recommendations, runs down whether Medicare Advantage reduces spending and helps beneficiaries.