Why Hospital Prices Keep Rising—And How Competition Can Help

BusinessPolicyWhy Hospital Prices Keep Rising—And How Competition Can HelpBySally Pipes,Contributor.Forbes contributors publish independent expert analyses and insights. Sally Pipes is a scholar and think tank CEO who writes on health care.Follow AuthorAug 24, 2026, 08:00am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.SummaryPrescription drug prices fell 3.1% last year, the sharpest decline in decades, while hospital costs surged 5.2%. Despite this, policymakers largely focus on drug prices. Hospital care, at $1.6 trillion, constitutes 31% of total healthcare spending, with prices rising 220% since 2000, far outpacing inflation. This escalation stems from widespread hospital consolidation, with nearly 500 mergers since 2016, reducing competition and driving significant price hikes without improving quality. To genuinely lower healthcare costs, the focus must shift to hospitals. Solutions include enforcing price transparency, implementing site-neutral Medicare payment reforms, and repealing certificate-of-need laws that stifle market competition, ultimately aiming for more affordable healthcare.Show More “For years, lawmakers in both parties have disproportionately focused on prescription drug prices,” says health expert Sally Pipes. “The latest inflation data suggest it's time to shift that focus.”Getty ImagesPrescription drug prices fell 3.1% over the past year, the sharpest annual decline in more than six decades, according to new data from the federal Bureau of Labor Statistics. Hospital prices, meanwhile, rose 5.2%.Yet the vast majority of Washington policymakers focus their time and attention on reducing drug prices, not hospital costs.It’s easy to see why. Just like “Big Tobacco” in the 90s, “Big Pharma” has become a boogeyman in both parties. As research has shown, tobacco kills and drugs save lives. By contrast, voters tend to look favorably on their local hospitals.But if lawm...