Anti-competitive hospital practices cost American families up to $2,500 a year

Don't take it from me. The number is a (conservative) federal estimate. Much of the extra cash goes to executives like Steven Corwin, who made $26 million in 2024 running a "nonprofit" hospital chain.

Hospital chains use their market power over private insurers and patients to raise costs by up to $2,500 per American family per year, a new federal report has found.

The report adds to the evidence hospital price increases are helping drive the medical cost crisis, with hospital executives among the biggest beneficiaries.

It highlights a civil suit the Department of Justice filed in March against New York-Presbyterian, a “nonprofit” hospital chain that paid 20 executives $1.5 million or more in 2024, including over $26 million to Dr. Steven Corwin, its chief executive.

Hospital prices have risen almost fourfold since 2000, far more than any other major economic sector. The increase in prices comes after decades of consolidation. Nearly half of medical centers have become part of bigger chains since 2000, largely erasing competition in many cities and metro areas.

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(Know what hasn’t risen fourfold? A subscription to Unreported Truths! At pennies a day, still the best bargain in journalism.)

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The White House Council of Economic Advisers released the report last week, but almost no one aside from healthcare trade reporters has noticed or written about it.

Health insurance company executives are so despised they risk being gunned down. But hospitals continue mostly to escape blame for their role in American healthcare’s exorbitant costs. The report suggests that in many cities and states, hospitals are far more important to high prices — and increasingly dominant over private insurers.

After mergers, hospital chains quickly raise prices, research has shown.

The process is largely invisible to patients, at least at first, because insurance companies pay for most hospitalizations.

As the report explains, insurers can try to push back on price increases by giving patients incentives to use cheaper smaller chains or independent hospitals. But once a chain owns a big enough share of the hospitals in a region, competing hospitals are simply not “credible alternatives to insurers.”

While a few medical centers, like the Mayo Clinic in Minnesota, have national or global reputations, hospitals are mostly a local business. Few sick people want to travel far for surgeries. Dominant local chains have further increased their power by buying physician practices as a way to direct patients both to their main hospitals and outpatient clinics.

And once a chain gets sufficient market power, it can then force insurers not just to cover its facilities but to drop any efforts to move patients away from them.

Chains typically use several different contractual tactics, with names like “anti-steering” or “anti-tiering,” the report explains. But all the terms work the same way, ensuring insurance companies cannot give patients any incentive to save money by using lower-cost hospitals.

The report suggested banning hospitals from those anti-competitive practices could cut the prices health insurers paid by $29 billion to $63 billion nationally. That figure equates to $1,100 to $2,500 per family in regions where hospital mergers have cut competition the most. Insurers would likely pass most savings along, the report suggested.

Chains built around prestigious academic medical centers — like New York-Presbyterian, which owns Columbia University’s flagship hospital — have been particularly aggressive about using their branding power to push prices aggressively, according to the March lawsuit the federal government filed against New York-Presbyterian.

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(Yes, the bank accounts of our top executives have never been healthier!)

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“Because of NYP’s size, brand, and reputation, and the many hospitals and other providers it controls, a payor selling health insurance plans to individuals and employers in Manhattan… must have NYP as a participant in at least some of its provider networks to have successful health insurance products,” the suit alleges.

In 2024, New York-Presbyterian reported revenues of $10.7 billion, up from $10.3 billion the year before, and “revenue less expenses” of $547 milion, up from $499 million. (A regular $11 billion business would refer to “revenue less expenses” as “profit,” but New York-Presbyterian is a nonprofit, see?)

And so it could well afford to pay Dr. Corwin $23.3 million in salary, with another $3 million in “other compensation.”

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Yet while the report suggests how much money banning these contracting practices might save, the Trump Administration has not proposed changing regulations or laws to do so.

American medicine may be sick, but consolidation has made hospitals — and their executives — healthier, richer, and more powerful than ever.