A House Energy and Commerce health subcommittee hearing on “Lowering Health Care Costs for All Americans: An Examination of the U.S. Provider Landscape” quickly became a referendum on who is to blame for America’s affordability crisis, and whether hospitals and physicians can remain viable under current policy.
Democrats on the committee argued Republicans had created the healthcare affordability crisis by cutting Medicaid and ACA support, while Republicans pointed to ACA‑era structures, consolidation and opaque pricing as the main culprits.
However, beyond the political crossfire, witnesses from hospital leaders, physician groups, employer coalitions and disability services told converging stories of a system where coverage is thinning, costs are rising faster than payments, and administrative friction is grinding down both patients and providers.
Together, they underscored that affordability debates on Capitol Hill are now inseparable from the day‑to‑day viability of hospitals, independent practices and the safety‑net services that keep vulnerable patients out of high‑cost settings.
Eight takeaways from the hearing:
1. A $43 billion administrative burden on hospitals
Rick Pollack, president and CEO of the American Hospital Association, told the subcommittee that in 2025, hospitals spent more than $43 billion attempting to collect payment that insurers already owe for care already delivered.
He cited a mid-sized health system that employs roughly 200 people to manage prior authorization and denial issues for inpatient services alone — 10 of them physicians who do nothing but argue with insurers to get care approved. Another mid-sized system spends more than $9 million annually just obtaining prior authorizations and more than $13 million appealing denials, most of which are ultimately overturned.
“Nearly 90% of physicians report that prior authorization somewhat or significantly increases physician burnout, which adds to the workforce shortages facing hospitals across the country,” the AHA’s written testimony noted, citing AMA data.
2. Hospital supply, drug costs outpacing revenue growth
Mr. Pollack was direct with the committee about cost pressures that are largely outside hospital control.
Hospital spending on medical supplies, equipment and technology rose 9.9% in 2025, while drug expenses climbed 13.6% — driven by both price inflation on existing medications and adoption of new, high-cost specialty therapies, according to the AHA. Labor costs, which represent roughly 60% of total hospital operating expenses, are growing 5.6% annually.
Set against a backdrop where Medicare margins have dropped to negative 12%, according to MedPAC data cited in the AHA’s written testimony, and where Medicare underpayments to hospitals totaled more than $100 billion in 2024, the operating math is increasingly unsustainable for hospitals without strong commercial payer revenue to offset it.
3. 340B draws criticism from both sides of the aisle
Rep. Buddy Carter, R-Ga., who introduced the 340B Access Act, told Mr. Pollack that 340B’s 20%-plus annual growth rate is unsustainable and that hospitals have become so dependent on the program that it is masking financial losses in other service lines.
“If I can’t see [it], I can’t help you,” Mr. Carter said, arguing that lack of transparency around 340B makes it impossible for Congress to tackle the underlying reimbursement gaps.
Mr. Pollack acknowledged hospitals would be “very willing to talk about how we can increase the transparency of how the program and how the funds are being distributed.”
Anthony DiGiorgio, DO, a neurosurgeon at San Francisco-based UCSF Health, went even further. He argued that 340B’s availability exclusively to hospital sites — not independent practices — gives health systems a powerful financial lever to acquire oncology, neurology and rheumatology clinics, generating large arbitrage margins that independent physicians structurally cannot match.
His testimony cited data suggesting commercial prices are nearly 20% higher at large 340B hospitals than at large non-340B hospitals.
4. Site-neutral payments come under fire
Dr. DiGiorgio laid out a detailed case that current Medicare payment policy creates a structural incentive for hospital systems to acquire independent physician practices and rebill services at hospital outpatient department rates — often dramatically higher than what the same service costs in a physician’s office.
He cited MedPAC data showing that a transthoracic echocardiogram is reimbursed 194% more in a hospital than in a freestanding office. For standard office visits, he testified that the hospital industry generates $2 billion annually in facility fees from Medicare patients alone, with an additional $480 million in beneficiary cost-sharing.
Dr. DiGiorgio is pushing for full site-neutral payment for routine outpatient services, with the Committee for a Responsible Federal Budget projecting $217 billion to $279 billion in deficit reduction over 10 years if Medicare payments were equalized across sites of care.
6. Employers running out of patience
Employers, who collectively spend more than $350 billion a year on healthcare, are running out of patience and are starting to act unilaterally.
Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, representing large self-insured employers and public purchasers covering roughly 21 million Americans, told the committee that healthcare pricing is “utterly irrational” and is not correlated to quality or safety. She cited PBGH’s recently completed price transparency data demonstration project, which found wide variation in prices for identical services at the same hospital depending solely on the payer.
One PBGH member removed a single high-priced hospital from its network and saved an estimated $120 million over four years — a 2% reduction in total annual healthcare spending from one network decision. Ms. Mitchell was blunt about where the fault lies: “No actor in the system has been willing to prioritize healthcare affordability over their own revenue,” she said.
She argued that when consolidation gives a single health system market dominance, transparency alone becomes a tool for dominant systems to monitor competitors and raise prices rather than lower them.
7. The physician payment crisis is a consolidation accelerator
David Aizuss, MD, an ophthalmologist and chair of the American Medical Association Board of Trustees, testified that Medicare physician payment has declined 33% in inflation-adjusted terms since 2001, while the Medicare Economic Index measuring physician practice costs has risen 63% over the same period.
The AMA’s written testimony showed that physician fee schedule spending per Medicare enrollee grew only 19% between 2015 and 2025, compared to 86% growth in the rest of Medicare Part B spending. The strategic implication is straightforward: the payment environment is the primary driver pushing independent physicians into hospital employment.
R. Shawn Martin, CEO and executive vice president of the American Academy of Family Physicians, noted that today nearly 75% of family physicians are employed by hospitals or other corporate entities — up from about 35% two decades ago. That consolidation has real system costs: research presented in the hearing showed a 14.1% post-acquisition increase in Medicare spending following hospital acquisition of independent physician practices.
8. Hospital consolidation’s defenders are increasingly isolated
During one hearing exchange, Mr. Pollack was pressed on how consolidation is supposed to lower patient costs when the evidence shows prices rise after mergers.
Mr. Pollack cited AHA research showing operating costs fell 3.3% and that quality metrics improved after systems came together. But Ms. Mitchell and Dr. DiGiorgio both directly challenged this framing. “All of the evidence we have shows that consolidation only drives up prices without any corresponding improvement in care,” Ms. Mitchell said.
Dr. DiGiorgio’s testimony cited a January 2025 HHS report prepared in consultation with the Justice Department and Federal Trade Commission concluding that healthcare provider consolidation “has led to higher prices, reduced access and lower quality care.”
Click here to watch the House hearing in full.
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