How hospital contract tactics and private equity are squeezing independent physicians, and the bills that could stop it

In a Medical Economics opinion piece, Eric Wargotz, MD, FCAP, a practicing pathologist in Maryland and the 178th president of MedChi, The Maryland State Medical Society, argues that horizontal and vertical consolidation has distorted the U.S. health care market and is raising costs for patients, employers and physicians. He describes how dominant health systems use "all-or-nothing" provisions to require commercial insurers to include every facility in the corporate network, forcing insurers to accept and overpay for high-cost, underperforming outpatient branches in order to access specialized hubs.

Wargotz says these bundling tactics rely on anti-steering clauses, which bar insurers from offering financial incentives such as lower co-pays for patients choosing independent care, and gag clauses, which prevent disclosure of transparent prices. He argues these terms suppress price discovery. Hospital executives, by contrast, defend bundled contracts as necessary to cross-subsidize negative-margin services such as rural clinics. Wargotz rejects that rationale, calling cross-subsidization an opaque tax on employers and arguing that rural support should instead come through transparent global budgets, targeted tax incentives or direct federal grants.

On the federal side, the piece points to the Healthy Competition for Better Care Act, which would ban all-or-nothing, anti-steering and gag clauses, and notes that ERIC has supported the measure. The author also addresses private equity, which he says has aggressively acquired nursing homes, outpatient surgical centers and independent physician practices over the past decade. He cites sale-leaseback arrangements, in which a firm buys a practice, separates the real estate and requires the clinical operator to lease its building back, as adding compounding rent costs. The Corporate Crimes Against Health Care Act would impose transparency rules and criminal penalties for executive payouts when such financial engineering leads to facility insolvency, and the Stop Corporate Takeovers of Physicians Act targets MSOs that use "friendly physician" models to take control of scheduling and billing.

At the state level, Wargotz highlights Maryland legislation that sharply restricts health care noncompete covenants, banning them for lower- and mid-tier earners and limiting duration and geographic reach for high earners. He argues that federal antitrust action sets national baselines while state medical societies drive local execution. The article does not provide dollar figures or specific bill numbers beyond the named legislation.