Across California, powerful hospital executives have perfected a ruthless negotiating tactic by using patients as leverage to demand more money.
When contract talks with insurers begin, hospitals push for major reimbursement increases. If they do not get what they want, they threaten to leave insurance networks entirely, knowing full well the fear and chaos that creates for patients and families.
The playbook is now familiar. Patients receive alarming notices warning they could soon lose in-network access to their doctors, specialists, cancer centers or children’s hospitals. Families with ongoing treatment suddenly fear disruption. Employers panic about coverage instability for workers. Public pressure mounts almost instantly. And all of it serves one purpose: forcing higher payment rates.
Big name hospitals like Memorial Sloan Kettering have engaged in this practice. California has also seen this repeatedly. UC Health threatened network disruption involving UCSF and other University of California hospitals. Sutter Health has long been viewed as one of the clearest examples of how dominant hospital systems can flex their market power during negotiations.
Hospitals understand that when they become large enough and powerful enough, they can use access to care itself as a bargaining weapon.
They often defend their rising prices by pointing to inflation, labor shortages or rising operating costs. But while pressures on hospitals may be real, they hardly justify the double-digit increases that are routinely demanded.
Patients facing cancer treatment, chronic illness, pregnancy or pediatric care are terrified of losing access to trusted physicians. Rightfully so. What isn’t right is health systems weaponizing that fear as negotiating leverage.
This is happening because California’s healthcare market has become deeply consolidated. In many regions, a small number of hospital systems now dominate the market. That dominance gives them enormous power to demand higher reimbursement rates because insurers, employers and patients often have no realistic alternative. When a hospital system becomes “must-have,” it gains the ability to push harder, threaten louder and demand more.
The financial consequences do not stay inside boardrooms. Every major reimbursement increase eventually flows through the healthcare system in the form of higher premiums, higher employer healthcare costs and higher out-of-pocket expenses for families. Californians are already drowning in healthcare costs. Yet some hospital systems continue using brinkmanship tactics that deliberately create fear and uncertainty because those tactics work.
Patients should never be used as hostages in financial negotiations. But that is increasingly what these disputes have become. The public deserves to understand that these network threats are not random breakdowns in negotiations. They are calculated pressure campaigns designed to extract more money by making patients fear losing access to care.
And that drives up the costs for all of us. Small business owners like myself and those I represent end up having to pay higher premiums, and so do our employees and their families.
As California debates healthcare affordability, policymakers and the public should stop treating these standoffs like routine business disagreements. They are demonstrations of raw market power. And unless someone is willing to confront how dominant hospital systems use patients as bargaining chips, healthcare costs in California will continue climbing with no end in sight.
Marc Ang is an estate and financial planner at Mangus Finance and President of Asian Industry B2B.
