“But that’s billing fraud.”
I said it out loud in a hospital billing office I had to lie my way into. My husband had come in for a routine steroid injection in his back — a simple procedure that was recommended by a surgeon I knew personally from working as a physician at that very hospital. When we checked in for his appointment, hospital staff demanded $6,000 upfront, claiming they needed to collect his full deductible before insurance paid out. We paid it.
Then the calls started. Thirty thousand dollars, they said we owed. I pulled his chart myself: four codes for an interspinous device insertion — an expensive procedure that never happened. When I finally cornered someone in billing, I was told this was standard practice: up-code patients with good insurance to offset the cost of uncompensated care for others. I fought back and won, walking out that day with a $5,000 check rather than a $30,000 invoice.
It took persistence and a confrontation most people would never know to attempt. Unfortunately, this is a case study in how vertical integration has ruined our insurance system. Vertical integration, within the health care system, is when a single corporation owns the insurance company that decides what’s covered, the pharmacy benefit manager that sets drug prices, the pharmacy that fills the prescription, and other intermediaries in between. This means the same company profits at every step of a patient’s care journey, all with little accountability nor oversight. There is no transparency, and there are exploitive loopholes to amass profits for parent companies, resulting in high costs for patients and independent providers.
Large hospital systems in California — and the rest of the country — have been buying up independent physician offices under the guise of streamlined care. In reality, these acquisitions drive up fees and costs for patients without improving care at all. It’s similar to what’s occurring with health insurance. CVS opened its first two pharmacies in Rhode Island in 1967. Since then, CVS has become one of the biggest health care conglomerates in the world, owning a health insurance plan, provider groups, medical networks, pharmacy benefit managers, shell group purchasing organizations, specialty and mail-order pharmacies, and more.
CVS is an easy example to highlight how we’ve let vertical integration get away from us, but it doesn’t stop there. This kind of consolidation is rampant, leading to higher profits for the companies all while patients experience rising out-of-pocket costs, confusing medical bills, and less access to the pharmacies and providers they know and trust.
Without significant reform and oversight of the insurance industry, patients and providers will continue to be squeezed by large companies who control what medicines people get, how much those treatments cost, and which pharmacy they are allowed to go to. For independent providers like me, it means that I’ll have to answer to a megacorporation’s random purchasing organization instead of my patients.
Meanwhile, the costs of running an independent practice — rent, staffing and equipment — rise every year, but reimbursements do not. Large hospital systems absorb this pressure or pass it on to patients. Private practices cannot. And yet, private practice is better for patients. We are smaller. We know them by name. We go out of our way in ways that institutions running on 15-minute appointment slots simply cannot. That value is real. It is just not reflected in what we are paid.
The math does not work — not for physicians, and not for patients — until policymakers can fix the significant dangers associated with vertical integration.
If the goal is a patient-centered health care system, we need large scale insurance reform. Stop penalizing the independent practices that large systems can simply absorb. Standardize prior authorization requirements across insurers. Enforce consistent reimbursement rates that keep pace with the real cost of care. Require that denials — especially AI-generated ones — be reviewed by an actual human being within a defined window. Make the process easier for the physicians and patients depending on a health care system that does just that: care.
None of this is radical. What is radical is a system that has rewarded large health conglomerates to absorb every entity in the supply chain. Someone has to decide that is no longer acceptable — it should not have to be the doctor lying awake on a Sunday night, checking messages, hoping nothing was missed.
Dr. Sera Ramadan is a double board-certified physician in internal medicine and obesity medicine and founder of Los Angeles Primary Care, an independent, physician-owned practice in Glendale. She previously worked as a hospitalist across major Los Angeles hospital systems.
