In today's world, healthcare is a local business. No one flies to another city for a colonoscopy. You get it where you live, from whatever hospitals are there, through whatever insurance your employer offers. Which means, in order to understand how American healthcare works, you don't need to study the whole country. One city will do.
I'm going to use Charlotte. Charlotte has two hospital systems, Atrium and Novant, and between them they have every acute care bed in Mecklenburg County, which is home to about 1.2 million people. Atrium has about 60% of the beds and Novant the rest. [1] Atrium's parent company, Advocate Health, took in $38.9 billion last year.
Here's my claim: Charlotte's hospitals work like a cartel. A couple of big sellers keep prices high, and they've made it very hard for anyone cheaper to compete with them.
A cartel is a group of sellers who, instead of competing, act together to keep prices up. The most famous is De Beers, the diamond company, which controlled most of the world's diamond supply for most of the twentieth century. [2] De Beers didn't own every mine. What it controlled was the selling. Most of the world's rough diamonds were sold through De Beers' office in London, to a few hundred handpicked dealers called sightholders. Each one was handed a box of stones chosen for them. There was no haggling. You took the whole box or none of it. And if you bought diamonds from anyone else, you stopped getting boxes. When an independent named John Williamson found a mine in Tanganyika in the 1940s, sightholders were warned that buying his stones could cost them their allocations. Eventually he gave up and sold through De Beers.
So why call Charlotte a cartel? Start with the prices. In the most recent figures I could find, Atrium's Mercy hospital in Charlotte collected 423% of what Medicare would have paid for the same outpatient care. That wasn't an outlier. Across North Carolina, hospitals got 334% of Medicare for outpatient care, and nationally private insurers pay hospitals about two and a half times what Medicare pays.
And it isn't because the care costs that much to provide. People in Charlotte don't use an unusual amount of hospital care. When the Health Care Cost Institute compared cities, Charlotte's inpatient prices were 12% above the national average, while its use of inpatient care was 20% below. Mercy reported a profit margin of 35% the following year. You don't get a margin like that by running a hospital unusually well. You get it when your customers have nowhere cheaper to go. [3]
In a normal market, prices like that would draw in cheaper competitors. In Charlotte they did. Six years ago an independent surgeon in Steele Creek, in southwest Charlotte, applied to open a small surgery center with one operating room. In the state's own comparison he projected he'd collect $5,284 per case. Atrium's main hospital projected $20,956. Novant filed a fifteen-page brief urging the state to turn him down, and the state did. The new operating rooms went to the incumbents instead: ten to Atrium and two to Novant. [4] Two years later an orthopedic group called OrthoCarolina asked to add an MRI scanner. It projected $515 per scan. Novant, competing for the same slot, projected $914. The slot went to Novant. [5]
So we're clear that there's price inflation here, and some bullying by the big guys. But the question isn't why Charlotte's hospitals charge so much. The question that proves Charlotte is a cartel is why the cheaper competitors don't win.
The answer is in Atrium's contracts with insurers. For years, according to the Justice Department, those contracts didn't allow insurers to give patients any financial reason, or even any information, that would lead them to use a competitor. [6] An insurer that signed with Atrium couldn't offer you a lower copay for going somewhere cheaper, or even tell you it was cheaper.
Why would insurers sign that? Because they couldn't leave Atrium out. Atrium had most of the hospital market in Charlotte, and the Justice Department said that without Atrium an insurer couldn't build a network anyone would buy. [7] Which puts the insurer in the position of a sightholder. It has to take the box, and the hospital decides what's in the box. That's the De Beers rule: you can buy from us, but you can't send anyone to the other guy.
In Wichita Falls, Texas, the dominant hospital made the rule explicit. When a doctor-owned rival opened, insurers were told they'd pay 13% to 27% more if they did business with it. In twelve years, the Justice Department said, no insurer took that deal. [8]
Now look at it from the point of view of the independent. Insurers pay independent doctors about 11% less for a routine office visit than they pay doctors who work for hospitals. Same visit. An independent can't fix that by being better or cheaper, because the insurer isn't choosing between the independent and the hospital. It already has to take the hospital.
So independents sell. Ask doctors who sold their practices to hospitals why they did it, and the reason at the top of the list is to get higher rates from insurers. David Eagle ran an independent cancer practice in Mooresville, just north of Charlotte, for almost twenty years. During the 2010s the big systems bought up the doctors' offices that sent him most of his patients, and eventually he sold to Novant. In the Charlotte region about 80% of oncologists now work for a hospital. This summer even OrthoCarolina, the group with the cheaper MRI, signed an affiliation with Atrium. [9]
And once the system owns the practice, the price goes up. One of Eagle's patients used to pay $75 for an office visit and a blood draw. After Novant took over, she was billed about $400 for the same visit, with the same doctor, in the same office. [10] Nothing about the medicine had changed.
What about someone who doesn't sell, and just builds? Then they run into the law. North Carolina is one of 35 states where you need the government's permission to build or expand a hospital or, until recently, a surgery center, and existing hospitals can argue that you shouldn't get it. That's the contest the surgeon in Steele Creek lost. A state court upheld the law last year. [11] A group of doctors can't open their own hospital anywhere in the country, because the Affordable Care Act effectively banned new doctor-owned hospitals. Those turn out to charge insurers 4% to 33% less than the hospitals around them. And when a patient sued Atrium under the antitrust laws, a federal appeals court ruled that he couldn't collect damages, because Atrium is technically a local government. [12]
This is why the arrangement lasts. Most cartels don't. The average one falls apart in about five years, and what usually kills it is someone new coming in. [13] De Beers lasted most of a century because it had ways of dealing with newcomers. Atrium has a better one. The law deals with them for it.
Charlotte isn't unusual. By the American Medical Association's count, 99% of metro hospital markets in America are highly concentrated, and in nearly half of them one or two systems provide all the inpatient care. [14] The names change from city to city, but you'd find the same three characters in each: the dominant system, the insurers who can't leave it out, and the independents who end up selling to it.
And you pay for it. Hospitals' prices go into insurers' premiums, and premiums come out of your pay. The premium for a family plan has more than quadrupled in the last 25 years, while wages have a little more than doubled. If you can't pay, you may hear from the hospital directly. In five and a half years, Atrium filed almost 2,500 lawsuits against its own patients, more than any other hospital system in North Carolina. One of them won it a $192,000 judgment against a 70-year-old woman and her husband, over his heart surgery. "I know my house will never be mine," she said. "It is going to be the hospital's."
Notes
[1] As of 2019 Atrium had 61% of the county's acute care beds and 58% of discharges. Novant had the rest. Source: Charlotte Ledger, "Atrium says Novant shouldn't build beds" (2019)
[2] De Beers had about 65% of the world's rough diamond supply as late as 2000, and later pleaded guilty in the US to fixing the price of industrial diamonds. Source: Sullivan v. DB Investments, 3rd Cir. (2011); U.S. Department of Justice, De Beers guilty plea (2004)
[3] Nationally, the RAND Corporation found that what hospitals charge tracks how much of their market they control, not their costs, and not how many Medicare patients they treat. That last part is a problem for the usual theory that hospitals overcharge private patients to make up for underpaying public ones. Source: RAND, Prices Paid to Hospitals by Private Health Plans, Round 5.1 (2024)
[4] In fairness to the state, it said the price comparison was "inconclusive," because a small surgery center and a major trauma hospital treat different patients, and it found real problems in the surgeon's application. But the state's own rules created the contest in the first place: there were 12 new operating rooms to hand out, and an independent had to beat the two systems for one of them. Source: NC DHHS, CON findings, 2020 Mecklenburg acute care bed and OR review; NC DHHS, South Charlotte Surgery Center disapproval letter; Novant Health, comments opposing the application (2020)
[5] The state scored the two applications on several factors, and Novant won on others, including the share of its patients on Medicare and Medicaid. Source: NC DHHS, CON findings, 2022 Mecklenburg MRI review
[6] Atrium's contracts were with the usual insurers: Blue Cross of North Carolina, Aetna, Cigna, and UnitedHealthcare. The Justice Department sued ten years ago, and the case ended with a settlement in which Atrium agreed to drop the terms, without admitting anything. The order expires after ten years. Source: U.S. Department of Justice, competitive impact statement, U.S. and North Carolina v. Charlotte-Mecklenburg Hospital Authority; DOJ case page
[7] Since the settlement some insurers have started selling narrower plans that leave out one system or the other. And this month North Carolina's State Health Plan, which covers about 750,000 people, moved most of Atrium's hospitals out of network in a fight over prices. Atrium responded by offering to waive the plan members' out-of-pocket costs if they keep using Atrium, which the plan says could cost it up to $250 million next year. Source: WUNC, "NC State Health Plan moves Atrium out of network" (Oct. 14, 2026); Blue Cross NC health plans (Blue Local with Atrium Health; Blue Home with Novant Health)
[8] These are the Justice Department's allegations against a hospital called United Regional, which settled without admitting them. Source: U.S. Department of Justice, U.S. and Texas v. United Regional Health Care System (complaint); DOJ case page
[9] OrthoCarolina is still physician-owned. The deal is an affiliation and a joint venture, not a sale. Source: Atrium Health, "Atrium Health and OrthoCarolina join forces" (July 2026)
[10] Most of the jump came from a "facility fee," which a hospital system can charge for a visit to an office it owns. Studies of hospital acquisitions nationally find the same doctors' prices rise about 14% within a couple years. Source: Charlotte Ledger / NC Health News, "When your doctor's visit comes with a hospital fee" (2024); Capps, Dranove & Ody, Journal of Health Economics (2018)
[11] North Carolina's surgery centers in big counties stopped needing permission in November 2025, because of a law passed two years earlier. The surgeon in Steele Creek reapplied that same day and was told he no longer needed a certificate. Source: NC DHHS, South Charlotte Surgery Center no-review letter (Dec. 2025); NC Health News, CON law upheld (2026)
[12] Benitez v. Charlotte-Mecklenburg Hospital Authority, decided in 2021. The court said the argument that Atrium had grown too big to count as a local government had "some common-sense appeal," but that changing the law was up to Congress. Source: Benitez v. Charlotte-Mecklenburg Hospital Authority, 4th Cir. (2021)
[13] Margaret Levenstein and Valerie Suslow, who looked at a lot of cartels, found that the most successful ones "actively try to create" barriers to entry. Source: Levenstein & Suslow, "What Determines Cartel Success?", Journal of Economic Literature (2006)
[14] The exceptions are the very biggest cities. The AMA's figure leaves out metros of more than 3 million people, and in New York, Los Angeles, and Chicago the top two systems have less than a third of admissions. But even among big metros, the top two systems have at least half the market in most of them. Source: American Medical Association, Competition in Hospital Markets (2026); KFF, one or two health systems controlled the entire inpatient market in nearly half of metro areas (2026)