Hospital Bills are Crushing American Families
In the United States, hospital bills are skyrocketing, leaving patients and taxpayers to cover the tab. These costs have devastating implications for all Americans.
Uncovering America’s Hospital-Driven Healthcare Crisis
Legislators must take action to address Hospital Waste, Fraud, and Abuse.
Often, these increasing costs are covered by excuses such as overutilization of the healthcare system, or higher quality of care. Yet, when compared to peer or near-peer countries, Americans experience lower quality care and less frequent visits.
A frequently ignored cause of rising healthcare costs is the role hospitals play in this system and the monopolization of the healthcare markets.
OUR TOP ISSUES
Non-Profit Hospital Waste, Fraud, and Abuse
The story goes like this: In exchange for giving back to the local communities in which they operate, non-profit hospitals are exempt from federal and certain state and local taxes, which in turn subsidizes their costs of care and enables them to continue providing for patients and their surrounding communities.
To receive these tax breaks, non-profit hospitals must meet standards set by the Internal Revenue Service called the “Community Benefit Standard,” including certain reporting and transparency requirements to demonstrate the benefits and services the hospitals deliver.
Here’s the real story: Non-profit hospitals are abusing their status while failing to fulfil their obligations to justify their tax exemptions. In 2024, it was revealed that 80 percent of non-profit hospitals gave back less to their communities than they received in tax breaks. Deemed “fair share deficits” by the Lown Institute, these disparities totaled $25.7 billion in 2024. Meanwhile, non-profit hospital CEOs’ salaries continue to rise exponentially. Between 2012 and 2019, CEO compensation grew 30 percent amounting to a mean annual salary of over $600,000 for CEOs at non-profit hospitals. This outpaced the national non-profit CEO salary, which ranged between $100,000 and $200,000.
For-Profit Hospital Waste, Fraud, and Abuse
Over the past two decades, private equity (PE) has come to play an increasingly influential role in the operations and management of hospitals across the United States. Recent reports found that PE has invested over $1 trillion into the American healthcare sector with 20 percent of all for-profit hospitals being owned or operated by PE firms.
Disconcertingly, studies have shown that patient experience worsens after a hospital is acquired by PE, as such acquisitions create incentives to produce short-term financial returns by dramatically cutting costs. Eventually, communities are harmed when PE firms gut and sell off the hospitals they acquire.
Understaffed hospitals creating patient suffering before eventually shutting down is the new norm when PE gets involved in health care. From Massachusetts to Illinois to Pennsylvania, PE is draining resources from both the surrounding communities and the state, which highlights the dire need for greater transparency and accountability. In Massachusetts, the state offered Steward Healthcare $72 million in emergency funding after the group declared bankruptcy. Meanwhile, Apollo Global Management, the PE firm invested in the group, walked away with approximately $325 million. PE ownership of hospitals drives up costs for all while hurting patients.
Holding All Hospitals Accountable to Price Transparency Laws
In their 2024 report, Patient Rights Advocate, a group dedicated to healthcare price transparency, found that only 21% of the 2,000 hospitals surveyed were fully compliant with federal transparency requirements established through the federal Hospital Price Transparency Rule.
According to the report, just over 16% of hospitals met the Patient Rights Advocate criteria for sufficient pricing data.
Additionally, a report from the HHS’s Office of Inspector General (OIG) found widespread failure among hospitals to comply with federal price transparency laws – with more than a third of the hospitals failing to post machine-readable data files, as is required by law, and others failing to disclose insurance rates. Time and time again, hospitals choose to maximize what they charge, whether it be a highly complex surgery or a dose of painkillers. We need more consistent enforcement of transparency laws, and more thorough reviews to ensure the accuracy of hospitals’ listed prices.
Future Legislative Solutions
States are beginning to examine the facts and take action to combat these problems, but more must be done. At the state level, Indiana Governor Mike Braun signed into law a bill that could take away a hospital’s nonprofit status if it is determined that their charges exceed the state average. Meanwhile, in the Senate, Senator John Kennedy (R-LA) introduced “The Same Care, Lower Cost Act,” would create real savings from site-neutral reforms that would save an estimated $157 billion in taxpayer dollars over 10 years and save Medicare beneficiaries between $94 billion-$134 billion in lower premiums and cost sharing over the same period.
In the House, Congresswoman Victoria Spartz (R-IN) introduced the “Holding Nonprofit Hospitals Accountable Act,” which would establish new community benefits standards for tax-exempt hospital organizations, ensuring that hospital systems cannot disrupt their surrounding communities.
We believe that these are just a few of the many solutions required to bring down the cost of health care in America, and we will continue to champion efforts at both the state and national levels to protect patients from hospital price gouging.
The lack of competition causes costs to rise
An analysis of 25 metropolitan areas that experienced the highest rates of hospital consolidation found that the price of a hospital stay increased substantially after a merger – with prices increasing between 11 and 54 percent.
When the massive hospital systems acquired doctors’ groups, the prices soared even higher. Hospitals’ acquisition of physicians was only exacerbated by the COVID pandemic as solo and group physician practices experienced decreased revenue due to lower healthcare utilization, as well as increased costs and workforce shortages.
Hospital abuse of the national healthcare system presents itself in a myriad of ways including insufficient charity care, high executive compensation, aggressive billing practices, lack of community benefits programs, profit-driven operations, and the use of resources for non-charitable purposes.
As the Trump Administration looks to root out fraud, waste, and abuse from the system, government officials must turn their attention to the role hospitals play. In 2023, American spent over $1.5 trillion on hospital care – which represented nearly a third of U.S. health expenditures in 2023, the highest segment of all expenditures.
Between 2000 and 2024, the price of hospital services increased by more than 250% – three times as fast as national inflation rates. This is greater than all other goods and services categories.
Hospital Facts
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CASE is Consumer Action for a Strong Economy, the nation’s foremost non-profit, non-partisan organization devoted to the singular cause of promoting consumer interests through the advancement of free-market principles.