An Ohio woman scheduled for a minor gynecological procedure was told the day before that her doctor could no longer perform it in his office. A hospital system had bought the practice the previous year and required the procedure to be done at a freestanding surgery center it also owned. Her estimate went from about $3,000 to roughly $6,000.
Her experience, reported by KFF Health News, is not a billing error. It is the predictable result of an ownership pattern reshaping American medicine, arriving as larger bills for care that looks unchanged. Where a procedure happens now often depends on who owns the practice, and that determines what it costs.
One Polyp, Two Very Different Bills
The patient, a radiology professor identified as Anne Hug, learned that the American College of Obstetricians and Gynecologists considers polyp removal appropriate for a doctor's office using local numbing. Her first referral would have placed it in a hospital operating room with an anesthesiologist, at an estimated $18,000.
She found an obstetrician willing to do it in-office and completed a two-week course of a hormone in preparation. Then came the call redirecting her to the system-owned surgery center. She declined the sedation she had been scheduled for, and the procedure took a few minutes.
The mechanism is site-of-service billing. The same service can carry a facility fee in a hospital-owned setting that it would not carry in an independent office, and that differential is not incidental to these acquisitions. It is a central reason the ownership of a practice can change a patient's bill without changing the care.
Small Deals That Never Reach a Regulator's Desk
The scale of the shift is easy to underestimate because it happened one practice at a time. The number of physicians working for hospitals rather than in private practice has more than doubled over the past decade. Roughly 82% of US physicians are now employed by hospitals, other corporate entities such as insurers, or private equity firms.
Most of those transactions are invisible to antitrust enforcement. Under the Hart-Scott-Rodino Act, deals must be reported for review only above a dollar threshold set annually, currently $133.9 million. Hospital and insurer mergers often clear it. Physician practice acquisitions usually do not.
Yale economist Zack Cooper and colleagues examined more than 275 hospital acquisitions of physician practices and found that over 99% fell below the threshold. Cooper, who has described the cumulative effect as death by a thousand paper cuts, said antitrust laws aren't fit for purpose at this point.
Federal enforcers acknowledge the gap. The Federal Trade Commission has brought eight actions or suits against healthcare mergers during President Donald Trump's second term, and Bureau of Competition director Daniel Guarnera said the agency has made healthcare competition one of our top priorities while noting it relies on complaints and news reports to learn about smaller deals. The Justice Department has brought two cases, both challenging hospital-insurer contracts rather than mergers.
The evidence on vertical integration is not uniformly negative. Some integrated systems, such as Kaiser Permanente, are long-established and popular. But when Harvard researchers studied hospital purchases of gastroenterology groups and their effect on colonoscopy care, quality declined while prices and complication rates rose. What improved was operational throughput, a financial measure rather than a clinical one.
Pharmacy Ownership Reshapes Prescription Costs
The same consolidation runs through the pharmacy side. Every major health insurer now owns a pharmacy benefit manager and specialty pharmacy operations. CVS acquired Aetna and directs its members to CVS Specialty through Caremark. Cigna owns Express Scripts, the specialty pharmacy Accredo, and the prior authorization firm EviCore. UnitedHealth includes Optum Rx, Optum Specialty Pharmacy and Optum Infusion Pharmacy.
Patients who switch insurers often must switch pharmacies, and longtime medications can arrive at different prices or not at all. One Florida father whose family relies on three specialty drugs found that his new insurer, unlike his previous one, did not count manufacturer copay assistance toward his $3,000 deductible. The assistance went to the insurer while his own spending obligation remained.
The FTC settled with Caremark in July, requiring greater transparency and more choice for patients and pharmacies, following a similar agreement with Express Scripts in February. Negotiations with Optum are underway.
Questions to Ask Before Scheduling a Procedure
Patients have limited leverage, but not none. Before scheduling an outpatient procedure, ask where it will be performed and whether that location bills a facility fee. Ask for an estimate in writing. Uninsured and self-pay patients are entitled to a good-faith estimate under federal law, and insured patients can request one. If the procedure can appropriately be done in an office, ask whether that option exists.
Patients changing insurance plans should confirm before January whether current medications remain covered, which pharmacy is required, and whether copay assistance counts toward the deductible. Cash-pay options for generics sometimes cost less than insured pricing.
Policy may shift some of this. Experts across the spectrum have long proposed site-neutral payment, under which the same service earns the same payment regardless of setting. The administration proposed extending site-neutral payments to some Medicare services in July, and further FTC recommendations are under White House review. None of that has taken effect. For now, where a procedure happens is a question patients have to raise themselves.
Key Questions Answered
What is vertical integration? When one company owns multiple parts of the healthcare supply chain, such as a hospital owning physician practices or an insurer owning a pharmacy benefit manager.
Why does the same procedure cost more in some locations? Hospital-owned settings can bill a facility fee that an independent office cannot, so identical care carries different prices.
Are these mergers reviewed? Most physician practice acquisitions fall below the federal reporting threshold of $133.9 million and are never reviewed.
Can I choose a cheaper setting? Sometimes. Ask whether the procedure can be done in an office, whether a facility fee applies, and request a written estimate first.
How does this affect prescriptions? Insurers commonly require members to use pharmacies they own, which can change prices, availability, and how copay assistance is applied.
Is integration always worse for patients? Not always. Some long-established integrated systems are popular, but studies of hospital purchases of physician groups have found higher prices without better outcomes.
Is anything being done? The FTC has settled with two pharmacy benefit managers and is negotiating with a third. Site-neutral payment proposals are advancing for some Medicare services.
