In this paper, we construct a hospital-level panel dataset covering the entire US hospital industry over the period 1996-2018. Using detailed hospital-level expenditure and revenue data, we measure hospital-level markups and document industry-wide increasing markups of about 18 percent. In addition, we confirm hospital-level markup estimates documented in the literature that were obtained using alternative approaches. We then relate markups to merger activity across hospital markets, and we find a strong association between markups and mergers at the market level. In particular, we find that mergers on average can explain about 3 of the 18 percent increase in markups. Our results indicate that market-level markups do not increase due to reallocation of market shares to higher markup hospitals, rather by an increase of markups at hospitals involved in mergers. We confirm that hospital system-wide mergers are the main factor driving the estimated merger-markup effect. (Coauthors: Jan De Loecker and Sebastian Fleitas)