April 29, 2026

What’s behind skyrocketing hospital prices

The chairman of the House Ways and Means Committee told hospital system CEOs that hospital consolidation and mergers “are fueling the borderline extortionary prices hospitals charge patients.”

Rep. Jason Smith, R-Mo., opened a committee hearing into hospitals’ role in high health care costs by saying, “Hospitals are charging an insane amount for care. Hospital prices have skyrocketed 300% in just over two decades – more than any other sector of our economy.”

He blamed hospital consolidation and mergers as one factor leading to high health care costs.

“Today, there are 4,500 hospitals, and 2,000 of them have undergone a merger. The result is that today, 90% of hospital beds are part of a health system. The pace and scale of mergers have led to market concentration that puts patients at the mercy of hospital empires. When hospitals have no competition, it’s no wonder that the sky seems to be the limit for prices.”

Smith said that when CEOs of some of the largest health insurance companies came before his committee earlier this year, they pointed the finger at hospitals as reason for skyrocketing health costs.

“This committee isn’t interested in hearing about how the high prices your businesses charge are someone else’s fault,” he told hospital system leaders. “The blame game didn’t work with insurers, and it won’t work today.”

Hospital CEOs who testified at the hearing agreed on several possible solutions to deliver affordability. They include:

Ensuring stable and affordable health insurance coverage.
Reducing administrative complexity and regulation.
Strengthening access to care.
Investing in preventive health.
Passing the Medicare Advantage Prompt Pay Act to get payment into the hands of health care providers more quickly.

Health care is too expensive for many

“The reality of our system today is clear – health care in this country has never been more advanced, but it is too expensive for too many people,” said Sam Hazen, CEO of HCA Healthcare.

He called on the committee to ensure Americans have stable and affordable health coverage. “But coverage alone is not enough,” he said. “Our job as providers is to control what we can, by focusing on our patients and improving the efficiency and quality of care while increasing transparency of their healthcare costs. When we do that, we reduce complications and unnecessary utilization, and ultimately reduce costs for everyone.”

Hazen also called for fair competition, where hospitals compete on quality and outcomes.

“One area where federal and state governments may help promote competition is through the elimination of certificate of need laws,” he said. “CON laws were originally intended to help manage costs and prevent duplication of services, but decades of evidence suggest they often do the opposite, by limiting competition, constraining supply, and driving up prices. Revisiting these laws would encourage new entrants, foster innovation in care delivery, and help address capacity shortages in both fast-growing and underserved areas.”

Administrative and regulatory simplification also would contribute to lowering costs, Hazen said.

“Too often, insured patients face administrative barriers that delay or limit access, including prior authorization requirements, network restrictions and payment disputes,” he said. “Further, hospitals face an extensive and fragmented regulatory burden, with hundreds of various federal and state requirements. While these regulations are intended to ensure safe, high-quality care, their volume and overlap have significantly increased administrative demands and often limit efficiency.”

Costs, payment challenges squeezing hospitals

Hospitals are squeezed between increasing costs and challenges in being paid, said Wright Lassiter III, president and CEO of CommonSpirit Health, a Catholic nonprofit health system.

“It’s important to note that our operating margins are very slim, even in financially stable years,” he said. “Over the last five years, CommonSpirit has lost $3 billion and the losses continue to rise.”

He listed several factors leading to those losses.

Labor costs and workforce shortages continue to rise. Labor accounts for more than 54% of CommonSpirit’s operating expenses, and labor costs across its health system have risen by more than 20% over the last five years, he said.
The price of pharmaceuticals, medical supplies and advanced technologies continues to climb. As an example, he noted that the price of IV fluids increased 14% since 2024.
Administrative complexities and inefficiencies imposed by health insurers continue to drive up costs. For example, he said, managing the billing process for Medicare Advantage patients costs about 25% more than for patients covered by traditional Medicare. This is especially challenging when MA makes up 28.1% of CommonSpirit’s payer mix. In addition, commercial insurers increasingly deny claims and underpay for services. MA plans are among the most challenging in this regard, with $4.3 billion on CommonSpirit’s balance sheet from unpaid MA claims. Nearly $1 billion of those unpaid claims is older than 150 days.

Maintenance, labor costs add to financial pressure

Cost pressures also were cited by Dr. Brian Donley, CEO of New York-Presbyterian.

“Many cost drivers are external: administrative expenses driven by insurer practices and rising drug and supply prices, the increasing complexity of care for an aging population, and chronic disease becoming more prevalent. We face sustained cost pressures from rising patient complexity, increasing cost of goods, and persistent administrative burdens imposed by payors,” he said.

Donley added that the increased costs of maintaining and updating his health system’s physical infrastructure also contribute to financial pressure. Labor costs represent 58% of New York-Presbyterian’s expenses and are rising at a rate outpacing inflation.

Cutting federal funds hurt consumers, hospitals

Brad Woodhouse, president of Protect Our Care, blamed H.R. 1 for cutting $1 trillion in funding to Medicaid and the Affordable Care Act, and said the result will put even more financial pressure on hospitals and health facilities.

“Following the passage of H.R. 1, Protect Our Care launched Hospital Crisis Watch, an interactive map tracking hospitals, nursing homes, and other types of care facilities that have shut down or are at risk of shutting down or cutting services due to these devastating funding cuts,” he said. “This project has already reached the grim milestone of over 800 hospitals or health facilities that have closed, announced cuts, or are at high risk. When hospitals close, patients have to travel further for care, families face longer wait times in overwhelmed emergency rooms, expectant moms are left without accessible maternity care, and costs go up for everyone.”

Woodhouse said hospitals are the sixth-largest employer in the U.S. and are key economic drivers, especially in rural areas.

“But because of Congress, nearly 500,000 health care workers could lose their jobs,” he said. “Entire communities will be left without access to care while CEOs and billionaires get even richer. As our interactive map and report show, the consequences of H.R. 1 are already playing out, and things will only get worse in the years to come.”

The post What’s behind skyrocketing hospital prices appeared first on Insurance News | InsuranceNewsNet.