At a House Ways and Means Committee hearing, lawmakers targeted pricing and market power while executives pointed to cost pressures and reimbursement gaps.
A hearing before the House Ways and Means Committee brought hospital finances into focus as lawmakers questioned the drivers of healthcare spending and health system CEOs described the reality facing providers.
The discussion centered on pricing, profit margins, and consolidation, with members of Congress pressing for accountability, while CEOs of HCA Healthcare, CommonSpirit Health, New York-Presbyterian, and ECU Health pointed to cost pressures and reimbursement challenges impacting business decisions.
Though both sides agreed that rising costs remain a significant issue, the hearing illustrated a divide in how those costs are understood. That tension continues to influence both policy proposals and provider strategy as the debate over affordability moves forward.
Committee chairman Jason Smith, R-Mo., opened the hearing by comparing hospital profitability with major corporations and tying that performance to what patients pay for care.
“Hospitals with more than 100 beds have a higher profit margin than Delta Air Lines, Target, or Disney,” Smith said. “Turns out charging an arm and a leg for health care is more lucrative than the Happiest Place on Earth.”
Smith placed responsibility on the entire healthcare system and highlighted insurers, which also faced the committee in January, but stressed that hospitals must answer for their role.
“This committee isn’t interested in hearing about how the high prices your businesses charge are someone else’s fault,” Smith said. “The blame game didn’t work with insurers, and it won’t work today. Simply put, hospitals are charging an insane amount for care. Hospital prices have skyrocketed 300 percent in just over two decades – more than any other sector of our economy.”
That line of questioning reflects a growing focus in Washington on hospital pricing as a central factor in affordability, and a push to rein in price increases through policymaking.
During the hearing, lawmakers raised concerns about the impact of consolidation on negotiated rates, the role of large systems in shaping local markets, and the degree to which higher commercial prices ripple through employers and households.
Executives described a more complex financial picture that extends beyond headline margins.
Sam Hazen, CEO of HCA, acknowledged elements of the committee’s concerns while emphasizing that hospital reimbursement varies widely based on factors like patient mix and acuity.
“There are certain aspects of your discussion here that have merit,” Hazen said. “I think there’s also merit to the hospitals receiving a premium in certain circumstances, so we would be more than willing to work with you on that.”
Payment friction emerged as a recurring theme, particularly in relation to Medicare Advantage. Wright Lassiter III, CEO of CommonSpirit, pointed to delays and denials as a source of strain for large nonprofit systems.
“Medicare Advantage plans are the most challenging today,” he said. “We have $4.3 billion in unpaid Medicare Advantage claims, with nearly $1 billion of that being more than 150 days past due for care that CommonSpirit has delivered to patients and communities that you represent.”
The conversation also turned to consolidation and access in regional markets. Michael Waldrum, CEO of ECU Health, described consolidation as a response to shifting market dynamics rather than a strategy aimed at expanding pricing leverage.
“Consolidation in our market is not driven by preference, it is how we survive,” he said. “As some exit and others enter with profit-driven agendas, systems like ECU Health are left to serve as a safety-net. The result is reduced access, worsening outcomes and increasing costs.”
A statement submitted by the AHA for the hearing reiterated the current pressures facing hospitals, but noted an effort to reduce the cost of care by “improving efficiency, embracing innovative technologies and redesigning how services are delivered.”
The AHA called on insurers, purchasers, drug and supply manufacturers, and policymakers to work together with hospitals on four key areas of the healthcare system: improving the health of individuals and communities, advancing value through care transformation, reducing regulatory and administrative waste, and innovating to improve care quality and outcomes.
However, the gap between how lawmakers view hospital pricing and how health system leaders contend with rising costs and uneven reimbursement continues to limit alignment on policies aimed at improving affordability.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
House Ways and Means Committee members cast hospitals as central figures contributing to increased costs for patients.
CEOs from major health systems highlighted labor costs, Medicare Advantage delays, and uneven reimbursement.
Ongoing disconnect between lawmakers and hospital leaders continues to affect affordability policy and provider strategy.