Four health system CEOs faced intense questioning from lawmakers April 28 about hospitals’ role in rising U.S. healthcare costs.
The CEOs of Nashville, Tenn.-based HCA Healthcare; Chicago-based CommonSpirit Health; New York City-based NewYork-Presbyterian; and Greenville, N.C.-based ECU Health testified before the House Ways and Means Committee in a four-hour hearing that covered Medicare Advantage, site neutrality and federal funding cuts.Republican lawmakers largely pressed the leaders on hospital pricing and consolidation, while Democratic committee members raised concerns about the financial strain HR-1 could place on hospitals and their communities. Meanwhile, CEOs pointed to several drivers of affordability challenges, including payer friction, administrative complexity and underfunded rural care.
Six takeaways:
1. Hospital pricing. House Ways and Means Committee Chairman Jason Smith, R-Mo., kicked off the hearing with pointed accusations against hospitals in his opening remarks. He contended hospitals are the primary driver of rising U.S. healthcare costs, citing federal data showing hospital prices increased 300% in the last 20 years with hospital care accounting for one-third of all U.S. health spending — about $1.6 trillion annually. As a whole, U.S. healthcare spending has increased by roughly 179% from 2004 to 2024, climbing from $1.9 trillion to $5.3 trillion, with hospital spending consistently making about one-third of it.
While Mr. Smith’s remarks did not cite a source for the 300% price increase claim, BLS Consumer Price Index data show hospital services prices have risen sharply over the past two decades — outpacing every other category of medical care, including physician services and prescription drugs. However, the CPI tracks consumer-facing prices and excludes most Medicare and Medicaid payments, which together account for the majority of hospital revenue.
“The corporatization of American hospitals means that our local hospitals and physicians have been replaced by mega-corporations that put quarterly earnings over quality care and grow larger simply for the sake of growing larger,” his opening remarks read. “Hospitals with more than 100 beds have a higher profit margin than Delta Air Lines, Target, or Disney. Turns out charging an arm and a leg for healthcare is more lucrative than the Happiest Place on Earth.”
CommonSpirit, a 138-hospital, nonprofit system, reported a $225 million operating loss (-0.6% margin) on $40.1 billion in revenue for the year ended June 30, 2025, while HCA, a 189-hospital, for-profit system, reported $9.8 billion in operating income (13%) margin on $75.6 billion in revenue in 2025.
NewYork-Presbyterian has yet to post its financial results for 2025, but reported $386 million in operating income (3% margin) on revenues of $13 billion in 2024, according to financial documents obtained by Becker’s. The most recent financial results for ECU Health were not immediately available.
Mr. Smith argued that hospital consolidation and site neutrality payment disparities allow hospitals to collect higher Medicare reimbursements for the same services delivered in hospital-owned clinics than in independent physician offices.
The chairman also accused urban systems of exploiting a rural hospital classification loophole to collect benefits intended for rural communities, with those designations jumping from three hospitals in 2017 to 425 by 2023.
While HCA was the only investor-owned system represented at the hearing, nonprofit systems faced similar levels of scrutiny as Mr. Smith claimed their charity care spending falls below the value of their annual tax breaks. He also questioned large systems’ participation in the 340B drug discount program, pointing to $290 billion in discounts and what he described as limited evidence the savings reached low-income patients.
2. Payer friction. When asked what is driving up costs for consumers, the CEOs frequently pointed to payers, particularly Medicare Advantage plans.
Wright Lassiter III, president and CEO of CommonSpirit Health, said the system has $4.3 billion in unpaid Medicare Advantage claims, with nearly $1 billion more than 150 days past due. Processing an MA claim costs 25% more than a traditional Medicare claim, and MA reimbursement often does not cover the full cost of care, he added.
HCA CEO Sam Hazen said he sees opportunities to reduce payer friction, including through digital integration between payers and providers, adding that the system is working with “some of the major payers on that very effort.”
3. Administrative burden. Each of the CEOs described administrative complexity as a significant cost driver tied to payer requirements and regulatory overlap.
Regulatory burden adds $1 billion in annual costs at CommonSpirit, Mr. Lassiter said.
ECU Health CEO Michael Waldrum, MD, said 20% of every healthcare dollar goes to administrative burden. He cited the roughly 3,700 Medicare Advantage plan options available to beneficiaries, each with different reporting and runoff rules, as a major source of strain on rural clinics.
Mr. Lassiter asked the committee to consider standardizing clinical information transmission, reducing overlapping quality measures that health systems report on to multiple agencies, and creating one claim system for Medicaid. He also called for stronger behavioral health coverage, citing the costs incurred in emergency departments when patients lack adequate coverage.
4. Site neutrality. Lawmakers pressed CEOs on the gap between hospital and outpatient pricing for similar services, a debate that has intensified as Congress and CMS push toward site-neutral payments.
Site-neutral payments would reimburse the same service at the same rate regardless of where it’s delivered, eliminating the premium hospitals currently get over physician offices and ASCs for identical procedures. Proponents argue the differential reflects billing structure, not clinical need. Hospitals, on the other hand, argue that higher HOPD rates are justified by their regulatory burden, patient complexity and EMTALA obligation to treat all comers.
CMS has been slowly moving in that direction for years, and Kaufman Hall recently warned hospital leaders the question is no longer if site-neutral payments will expand, but how fast and how deep.
Rep. David Kustoff, R-Tenn., cited CMS data showing the facility fee for a colonoscopy is $656 at an ASC compared to $1,222 at a hospital. Rep. Jodey Arrington, R-Texas, noted biopsies average $150 at physician offices versus $800 at hospitals.
When Mr. Arrington asked the CEOs directly whether they supported site-neutral payments, three did not raise their hand. Mr. Hazen hesitated before partially raising his.
“There are certain aspects of your discussion here that have merit,” Mr. 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.”
He added that “there could be certain procedures” where price differences “are too significant, and they need to be less because they’re not emergency driven.”
Both Brian Donley, MD, CEO of NewYork-Presbyterian, and Mr. Lassiter said their systems do not acquire physician practices for the purpose of converting them into hospital-based sites. Dr. Waldrum defended the higher reimbursement for hospital outpatient departments as justified, arguing hospitals operate under a federal mandate to treat anyone who walks through the door — an obligation he said physicians, insurers and drug companies do not share. He said HOPD reimbursement is what allows rural hospitals to recruit and retain physicians in communities where no independent practices would otherwise exist, suggesting any changes to that reimbursement structure could put rural access at risk.
5. Rural healthcare and HR-1. Health system CEOs also raised concerns about rural healthcare sustainability and Medicaid funding changes tied to HR-1.
ECU Health expects a $30 million reimbursement decrease in 2028 under HR-1, compounding to roughly $1 billion in cuts over 10 years, Dr. Waldrum said. He added that ECU cross-subsidizes maternity units in five remote rural locations with academic medical center revenue. Closures for that specific care setting are linked to worse maternal health outcomes in rural counties and force pregnant patients to travel farther for care, which can complicate emergencies.
“AI will not deliver a baby,” Dr. Waldrum said. “And so I pay doctors and nurses and drug companies to catch one baby, or maybe two babies a day. … We know that if we close those units, more moms and babies die in rural America.”
Rep. Terri Sewell, D-Ala., said during a roundtable with rural hospital CEOs, many expressed pessimism about Rural Health Transformation Program funding trickling down to them. Dr. Waldrum responded that he does not expect the program’s funding will offset Medicaid cuts.
Mr. Hazen said HCA has acquired eight hospitals since the pandemic — five of them rural, including two that were bankrupt or near-bankrupt. He added that the system saw a 15% increase in uninsured patients systemwide in the first quarter of 2026, which he said was tied to a decline in covered lives following the expiration of enhanced ACA subsidies. He said HCA’s pricing has not changed as a result.
The rural classification system also drew scrutiny from lawmakers. Mr. Smith questioned NewYork-Presbyterian’s designation as a “rural referral center” despite its Manhattan location.
Dr. Donley said the system meets CMS qualifications as a referral center and noted that many of its trainees go on to practice in other communities, including rural areas.
6. AHA’s response. In a statement submitted for the hearing, the American Hospital Association said hospitals can advance efforts to reduce care costs by redesigning how services are delivered, improving efficiency and embracing innovative technologies. The association pointed to hospitals investing in preventive care and care coordination programs to help manage chronic conditions and avoid unnecessary hospital visits, which improve outcomes and lower costs for patients and the healthcare system.
Mackenzie Bean and Alan Condon contributed to this report.
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