A hospital
Although pharmaceutical companies and insurance providers receive much of the attention, hospitals -- especially nonprofit systems -- are the primary driver of health care cost inflation and systemic inefficiency. In 2023, Americans spent more than $1.5 trillion at hospitals, accounting for nearly one-third of total health care expenditures, a new report from the Center for Medicine in the Public Interest found.
The report builds on the current national conversation about health care reform. Despite the Trump administration’s efforts to increase price transparency in health care, almost 80% of hospitals were out of compliance with federal requirements as of last year.
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"From hospital mergers to executive and administrative pay to site-based fees, hospitals are increasing costs for Americans, without oversight or accountability,” said Peter Pitts, president of the center. “The current momentum for increased accountability is promising, but there is a desperate need for long-term reform. Patients deserve to know what they are paying for and to pay based on the service, not the location of care."
Over the last 25 years, hospital service prices have surged, significantly outpacing inflation. Fee-for-service models exacerbate these issues by incentivizing hospitals to provide more billable procedures, even when clinically unnecessary. This volume-driven care has proved to be costly and wasteful, the report said.
A significant portion of this spending arises from redundant services, excessive administrative overhead and inefficiencies embedded in payment models. Americans who recently have hospitalized may have experienced overcrowding, soaring prices, degraded service, lack of price transparency and phantom billing.
State and federal officials are taking notice. President Donald Trump, as one of the first acts in his second administration, signed an executive order to empower patients through "radical price transparency." In late May, Florida Attorney General James Uthmeier issued subpoenas to hospitals based in the state to ensure they comply with state transparency laws. And Indiana Gov. Mike Braun signed legislation targeting high prices at nonprofit hospitals, requiring them to increase transparency or face losing their nonprofit status.
The report proposed several potential legislative reforms:
- Price transparency: Require hospitals to disclose clear, upfront pricing.
- Site-neutral payments: Equalize reimbursement across care settings.
- Tax-exempt criteria reform: Tie nonprofit status to tangible community benefits
- Executive compensation oversight: Impose stricter guidelines on salaries and bonuses.
"Hospitals have remained in the shadows for too long, and the divergence between the mission of nonprofit hospitals and their operations can no longer be ignored,” Pitts said. “Profits cannot be placed over patient well-being, and revenue must not be prioritized over responsibility.”
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
