The American Hospital Association (AHA) recently declared that U.S. hospitals and healthcare providers are facing an “unprecedented economic crisis,” citing tight margins fueled by rising costs for worker salaries, prescription drugs, and medical equipment.
Increasing Litigation and Large-Scale Settlements
In its amicus curiae brief filed in a lawsuit accusing health insurers of using algorithmic pricing tools to systematically underpay out-of-network providers, the AHA highlighted the stark economic divergence between providers and insurers. The AHA noted that insurers generate substantial revenue, maintain healthy margins, and provide significant returns to shareholders.
This economic pressure has led to increasingly aggressive tactics by healthcare providers, often resulting in litigation. “For example, in-network providers routinely bring claims against their insurance company counterparties, seeking to recover amounts alleged to have been improperly withheld,” the article stated. These claims often result in significant awards, such as Envision Healthcare Corp.’s $91 million victory over UnitedHealthcare Group in May 2023, or a Radiology Partners affiliate’s $153 million award against UnitedHealthcare later that year.
Impact of Private Equity and Antitrust Scrutiny
The ongoing tug-of-war between providers and insurers has driven both sides to consolidate further, enhancing their bargaining power. This trend is exacerbated by private equity firms employing strategies like “roll-ups” to gain market leverage and increase prices.
