A message from Shawn Gremminger, president and CEO, National Alliance of Healthcare Purchaser Coalitions:
Rising healthcare costs are crippling the nation, in large part driven by unchecked hospital pricing practices. When large hospital systems abuse their pricing power, the burden falls on working families, small businesses, and local communities – resulting in higher premiums, stagnant wages, and cuts to essential programs.
Employers, who foot the bill for healthcare coverage, are sounding the alarm on concerning trends in spending that could make it financially unsustainable to provide benefits within the next five to 10 years. This year, employers are bracing for an expected 8–9% increase in healthcare costs, forcing them to make difficult decisions regarding coverage, wages, and investments in growth.
We need common-sense policy solutions to address this crisis. That’s why the National Alliance of Healthcare Purchaser Coalitions, the leading national consortium of state and regional employer coalitions, is launching a new campaign uniting America’s employers to raise awareness of the harmful hospital pricing abuses that drive up healthcare costs across the country and call on policymakers to stop these abuses.
We believe three key issues demand attention:
First, hospitals are marking up the prices of drugs and other goods, pocketing government-mandated discounts, and exploiting tax breaks – all while making healthcare more expensive for the average employee. Large, well-resourced hospitals frequently inflate the prices they charge employers for drugs while pocketing discounts from government programs, such as 340B, and receiving various supplemental payments that are disproportionate to the level of charity care provided. Many of the worst offenders are large nonprofit hospital systems that behave like for-profit businesses, enjoying tax breaks while providing minimal charity care or benefits to the communities they operate in, particularly in low-income areas. These questionable gains fuel hospital system expansion into wealthier neighborhoods, where employer-sponsored insurance means bigger payouts. Meanwhile, commercial plan sponsors are saddled with ballooning costs and pay between 150% and 700% of Medicare rates for hospital services.
Second, hospital industry consolidation is harming competition and shrinking choice, handing already large hospitals more power – and strapping employers and working families with bigger bills. Over the past three decades, approximately 2,000 hospital mergers have consolidated market power. As of 2022, one or two health systems controlled the entire inpatient market in nearly half of metropolitan areas. Equally concerning, we’re seeing hospital systems buying up local doctors’ offices, renaming them, and then billing employers and patients at higher rates for the exact same care. Evidence shows these anticompetitive moves have increased the average price of hospital services by 6–18% and reduced the share of physicians that work in private practices by 13% between 2012 and 2022. Hospitals claim consolidation improves quality, access, and economies of scale, but the data show what we, as employers, know to be true: hospital consolidation leads to access limitations and worsening quality, particularly in rural and under-resourced areas of the country.
Third, large hospital systems are hiding the ball on true costs; this lack of transparency masks the outsized impact of their unchecked pricing power on healthcare spending. Opaque billing practices and ‘gag clauses’ between health plans and hospitals hide real costs of care from patients and plan sponsors, including employers. Prices bear little connection to the actual cost of services, evidenced by wide-ranging pricing across the country for the exact same procedures. In the National Alliance’s 2024 Pulse of the Purchase Survey, employers reported that they are most concerned about hospital pricing integrity and its reasonableness for services provided. This is deeply problematic. More transparency is needed – particularly in the 340B program – to shine a light on the full impact of hospital pricing abuse on overall healthcare costs.
The time for passive concern is over. Employers are uniting to demand real solutions that bring transparency, competition, and accountability to hospital pricing. The status quo is failing – and driving up costs while leaving America’s businesses and working families behind.
Policymakers must put a stop to these abuses by reining in unchecked hospital pricing power and demanding greater transparency, accountability, and value for the public.
For more information and to follow along with our efforts check out www.hospitalpricingabuse.org.