A patient in Ohio was quoted about $3,000 to have a uterine polyp removed in a doctor's office. The day before the procedure, she was told it had to be done at a freestanding surgery center owned by the health system that had bought the practice in 2025, and the bill came to about $6,000, KFF Health News reported September 8. An earlier plan to do the procedure in a hospital operating room had come with an $18,000 estimate. In the end, the doctor numbed her cervix and removed the polyp in a few minutes.
That gap reflects a pricing mechanism most patients never see. When a hospital system acquires a physician practice, services can often be billed at higher hospital outpatient rates, and patients can be steered to higher-priced settings the system owns. Patients with high-deductible plans can end up paying much of the difference themselves.
The shift is becoming harder to avoid. According to Physicians Advocacy Institute research cited by KFF Health News, 82 percent of U.S. physicians are now employed by hospitals, other corporate entities such as insurers, or private equity firms.
The Fee That Follows an Acquisition
Medicare and many private insurers pay more for services delivered in a hospital outpatient department than for the same services in an independent physician's office. The higher rate is meant to cover hospital overhead, such as round-the-clock staffing and emergency readiness. Once a practice becomes part of a hospital system, it can often bill under the hospital schedule even when the office, doctor, and equipment stay the same.
For patients, that can mean two bills instead of one: one from the physician and one from the facility. It can also mean being sent to a more expensive setting. In the Ohio case, the patient had learned that the American College of Obstetricians and Gynecologists says the polyp removal can be done in an office with local numbing, yet the practice's new owner required a surgery center.
Economists call this vertical integration, when one company controls several links in the chain of care. KFF Health News has also documented how hospital consolidation drove up prices in Asheville, North Carolina, in its report Same Knee Surgery, Twice the Price. And Harvard researchers found that after hospitals bought gastroenterology physician groups, colonoscopy prices and complication rates rose while quality fell, KFF Health News reported.
Deals Too Small for Regulators to See
Under federal law, mergers above a dollar threshold, set this year at $133.9 million, must be reported for antitrust review. Most doctor practice purchases fall far below that line. Zack Cooper, a Yale economist, and his colleagues examined more than 275 hospital acquisitions of physician practices and found that over 99 percent fell below the reporting threshold, according to their working paper.
Cooper described the result as "death by a thousand paper cuts," with consolidation built one small deal at a time. The Federal Trade Commission has brought eight actions against health care mergers and acquisitions during President Donald Trump's second term, and the director of its Bureau of Competition told KFF Health News that the agency relies on complaints and news reports to learn about smaller deals.
The evidence here comes mostly from pricing and claims data rather than controlled experiments, and not every integrated system raises prices. Cooper noted that some popular integrated systems, such as Kaiser Permanente, combine insurance, hospitals and doctors, so taking a blunt approach to every deal could backfire. Still, the studies KFF Health News reviewed found that acquisitions often raised prices without clear benefits for patients.
A Medicare Rule That Could Narrow the Gap
The most concrete federal change on the table is in Medicare. The Centers for Medicare and Medicaid Services' proposed outpatient payment rule for next year, released July 2, would extend Medicare's site-neutral approach to imaging services without contrast provided at older off-campus hospital outpatient departments, paying them the rate Medicare pays in physician offices. Rural sole community hospitals would be exempt. CMS estimates the change would cut Medicare Part B spending by about $260 million in the first year and lower beneficiaries' cost-sharing by about $70 million. If finalized, it would apply in 2027.
Medicare rules do not directly govern private insurance, which covers most working-age adults, so commercially insured patients may see little immediate change. Older adults in traditional Medicare typically pay 20 percent coinsurance on outpatient services, so lower Medicare rates can reduce what they owe.
People in markets dominated by one hospital system, and anyone with a high deductible, face the greatest exposure to these higher charges.
Questions to Ask Before a Scheduled Procedure
Patients can protect themselves with a few calls before a planned procedure. Ask whether the office or clinic is owned by a hospital and whether it bills a separate facility fee. Ask where the procedure will be done and whether it could safely be done in the office or at an independent surgery center.
Request a written cost estimate from both the physician and the facility. People who are uninsured or paying cash have a federal right to a good faith estimate before scheduled care. After treatment, compare the explanation of benefits with the bill, request an itemized statement and appeal charges that do not match what you were told.
If a clinician recommends a hospital setting, ask why it is medically necessary. Sometimes there is a clear clinical reason, such as the need for sedation or other health conditions. Knowing the answer helps patients weigh safety against cost rather than learning the difference from a bill.
What happens next will be decided largely in Washington. CMS typically finalizes its outpatient payment rules in November, and the FTC has sent proposals for new competition rules to the White House for review. For now, a phone call before a procedure remains the most reliable way to avoid a surprise.
Key Questions Answered
What is a facility fee?
It is a charge a hospital adds for the use of its facilities, billed separately from the doctor's fee. Offices owned by hospital systems can often add one even when care happens in an ordinary clinic setting.
Why would my bill rise after my doctor's practice was bought?
Once a practice becomes part of a hospital system, the same services can be billed at higher hospital outpatient rates, and patients may be steered to higher-priced settings owned by the system.
How common is corporate ownership of doctors' practices?
Physicians Advocacy Institute research cited by KFF Health News found that 82 percent of U.S. physicians are employed by hospitals, other corporate entities such as insurers, or private equity firms.
What is site-neutral payment?
It means paying the same amount for a service whether it is delivered in a hospital outpatient department or a physician's office. Medicare already applies it to some services and has proposed expanding it.
Does the Medicare proposal help people with private insurance?
Not directly. Medicare rules set Medicare payments, and private insurers negotiate their own rates, although Medicare policy can influence broader pricing over time.
How can I avoid a surprise facility fee?
Ask whether the practice is hospital-owned, whether a facility fee applies, and whether the procedure can be done in an office or independent surgery center. Get written estimates in advance.
When will Medicare decide?
CMS typically releases its final outpatient payment rules in November. If finalized, the proposed imaging change would apply in 2027.
