Everyone wants healthcare to “centralize like the Dutch.”

They have the Dutch story exactly backward.

The Dutch did not hand their market to a middleman. They handed it to the people who grow the product.

That is the one thing American healthcare will never allow.

IN TODAY’S ARTICLE

• The difference between a market the producers own and a market a middleman owns

• Why “centralize healthcare like the Dutch” is the wrong lesson pulled from the right country

• How the spread gets captured in flowers (it doesn’t) versus how it gets captured in your care (it does)

• The model that already proved transparent pricing and direct contracts can coexist

Glossary at the bottom of today’s article.

A CLOCK THAT COUNTS DOWN

I grew up on Dutch flowers. Long before I built healthcare companies, I knew the smell of a cold storage hall at four in the morning and the sound of a market waking up.

Here is the part most Americans never learn. The largest flower market on earth does not run on haggling. It runs on a clock. The price starts high and falls. The first buyer to press the button wins, at the price showing the instant they press. Hesitate, and you pay more. Wait, and someone takes it.

The Dutch invented this. The world calls it a “Dutch auction” for a reason. The price moves in one direction, in the open, in front of everyone, and the number you see is the number you pay.

Royal FloraHolland is the cooperative that runs it. Roughly 40 percent of the world’s flower and plant exports move through its hubs. In 2023, about 10.5 billion flowers and plants changed owners across its clocks and trade floors.

The Aalsmeer hall is one of the largest buildings on the planet by floor area. The clock there sets a price that wholesalers in Miami quote days later, even for stems that never touch Dutch soil.

Sit with that. A single transparent mechanism in the Netherlands is the reference price for an entire global commodity. That is why the next question matters: why does no equivalent exist for an MRI, a knee replacement, or a vial of insulin?

Now ask the question that matters.
Why does no equivalent exist for an MRI, a knee replacement, or a vial of insulin?

Everyone in healthcare has an opinion about “the Dutch model.”
Almost none of them have looked at the clock.
This is where the receipts live.

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WHO OWNS THE CLEARINGHOUSE

Here is the detail the consultants skip when they tell you to copy the Netherlands.

The growers own the auction.

Royal FloraHolland is a cooperative founded in 1912 by Dutch flower growers. Today, a few thousand grower-members own it. The people who produce the product own the marketplace that prices it. The infrastructure answers to them. The clock works for them.

That single fact is the whole game, and it is the fact the establishment buries.

When a McKinsey deck says “centralize healthcare like the Dutch,” it points you at the wrong noun. It wants you to see a big efficient hub and conclude that bigness and centralization are the lesson. They are not. The lesson is ownership.

A central clearinghouse owned by producers serves producers and buyers.
A central clearinghouse owned by a middleman serves the middleman.

American healthcare deliberately built the middleman model.

Look at who owns your clock. A pharmacy benefit manager sits between the drug maker and the patient, captures the spread between what it pays and what it charges, and then refuses to publish either number.

A group purchasing organization sits between the supplier and the hospital and collects an “administrative fee” from the very vendors it is supposed to negotiate against, under a federal safe harbor written in 1987 that legalized exactly that conflict.

A hospital system sits between you and a physician and marks the same service up several times over the moment it moves under a hospital tax ID.

None of them grow anything. None of them heal anyone. They own the clock, and the clock answers to them.

The Dutch flower grower maintains the spread because they own the market.
The American physician loses the spread because someone else owns the market. That is not a difference in efficiency.
It is a difference in who holds the deed.

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Bain Capital offered $3.2 billion to take Surgery Partners private.

The board said no.

Then the company started selling off surgery centers.

That is not strength.

That is a machine running out of fuel.

In today’s article:

• Why the largest shareholder in the biggest public surgery-center roll-up tried to buy the whole thing, and why the board refused

• The pivot that gives the game away: a buyer turning seller to service its own debt

• The number that broke the model was never the surgery center.

• The open door this leaves for physicians who still own their buildings.

Glossary at the bottom of today’s article.

THE BUYER WHO BECAME A SELLER

In August 2017, Bain Capital bought control of Surgery Partners. It paid $502.7 million for a majority stake and folded in National Surgical Healthcare for another $760 million. The thesis was the one every physician has heard pitched across a steakhouse table. Buy the centers. Build the scale. Sell the scale to the next buyer at a higher multiple.

For a while it worked exactly as designed. Surgery Partners grew into more than 200 surgical facilities across 33 states, with roughly 4,600 affiliated physicians. It went public in 2015. By late 2022, it needed an $800 million equity raise to keep the engine running, and Bain wrote a $225 million check into that raise.

Then came the tell.

On January 28, 2025, Bain offered $25.75 a share to take Surgery Partners fully private. The bid valued the company at nearly $3.2 billion, about 12.7 times earnings, a 27 percent premium. The stock jumped 20 percent in a day. Bain already owned about 39 percent of the company. This was the largest shareholder trying to buy the rest.

On June 17, 2025, the independent committee said no. Its chairman, Brent Turner, cited the company’s growth and market position. CEO Eric Evans framed the rejection as a sign of confidence.

Watch what happened next, because the press release will not say it plainly. After walking away from the buyout, Surgery Partners pivoted to selling and partnering off facilities. The stated reason was to cut leverage and accelerate cash flow. The biggest buyer of Ambulatory Surgery Centers became a seller of them. To pay down its own debt.

That is the entire story in one move.

THE MATH THAT BROKE

The consolidators do not want this part said out loud. The roll-up never ran on surgery. It ran on cheap debt.

The model needs three things. Borrow cheaply. Buy centers below the price you can mark them at once they sit inside a bigger platform. Sell the platform to the next buyer before the music stops. Every link in that chain depends on money being cheap and exits being open.

Money got expensive. Exits closed.

The deal data shows the seizure. Private equity healthcare acquisitions fell from 1,114 in 2021 to 940 in 2022 to 788 in 2023, according to PitchBook. The buyers did not lose interest in medicine. They lost the financing that made the math work.

And when the deals did happen, they got smaller. Of 148 transactions involving outpatient care operators in 2024, 119 were add-on acquisitions. Seven were leveraged buyouts. The era of the headline mega-deal gave way to quiet tuck-ins, because a tuck-in does not need the same leverage or the same exit.

Now hold that against the demand side, because this is where the establishment narrative falls apart. Outpatient surgery is not slowing. CMS added 289 procedures to the ASC covered procedures list for 2026 and began a three-year elimination of the inpatient-only list, starting with 285 mostly musculoskeletal procedures. The ASC market grows 6 to 8 percent a year. Surgery Partners itself deployed $66 million in acquisitions in a single quarter of 2025 and added eight facilities.

So the surgery center is fine. The leverage stacked on top of it is not. The thing that broke was the capital structure, not the care.

Everyone in healthcare has a take on consolidation.
Almost no one has the deal terms.
This is where the deal terms live.

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Watch a physician negotiate a salary, then watch the same physician flinch at the word equity.

She will fight to the third decimal on an RVU rate, then hand the entire asset to the people across the table without a fight.

She understands her wage.
She does not understand her capital.

And that gap is the whole reason she depends on everyone above her.

IN TODAY’S ARTICLE

• The reflex installed in training that turned capital into contamination

• Why prestige was sold to physicians as a substitute for ownership

• What capital actually is, once you stop confusing it with greed

• The four dependencies, and the asset that cuts each one

Glossary at the bottom of today’s article.

THE REFLEX THEY INSTALLED

From the first week of training, two columns get drawn for you. The clinical, which is sacred. The commercial, which is contaminated. The good doctor stays on the clean side of the table and lets the administrators handle the money, so the medicine stays pure.

By the end of residency, you do not think money is dirty. You feel it. The aversion sits below argument, in the same place as the reflex to scrub in.

That reflex does not make the medicine cleaner.
It decides who ends up owning it.
You were not taught to distrust capital by accident.
You were taught it by the people who planned to keep yours.

THE PEDIGREE TELL

Listen to how a physician introduces herself to another physician.

It starts with the training. The fellowship. The program. The named institution, dropped early, so the room knows the rank before the conversation starts. The whole exchange is a status sort, run in the first ten seconds, on credentials.

Now listen to how a founder introduces himself. He does not. Nobody who builds things leads with where he went to school, because in the room where things are built, nobody cares. The pedigree buys nothing there. It is not currency. It is a sticker.

I check out the moment you tell me where you trained. Not because the training is fake. Because it is the wrong question. I want the result. Tell me you built the thing.

Tell me you found the method that makes it cheaper and better. Tell me you figured out how to cover a thousand work comp patients at a price the carrier cannot touch. Now I am leaning in, and you did not need a single line of your CV to get there.

Here is what they did to you.

They granted physicians prestige in place of ownership.
The fellowship instead of the equity.
The title instead of the asset.
The wall of diplomas instead of the cap table.

You were taught to compete for rank within the guild, while people outside the guild competed for the thing that actually pays. Control.

WHAT CAPITAL ACTUALLY IS

The misunderstanding sits right at the center. Physicians hear the word capital and picture greed. A pile of money. Something a person hoards instead of heals.

That is not what capital is. Capital is control. It is the authority to decide how the work gets done, who does it, and on what terms. In this system, that authority is denominated in dollars, and nothing else is legal tender.

A physician with no capital does not set the staffing. Does not protect the patient from the spreadsheet. Does not fund the thing she believes in. She asks permission. Every day for 30 years, she asks the people who own the thing her work built for permission.

That is the cost of the flinch.
Not a smaller bank account.
A smaller life, lived entirely at the discretion of others.

And it compounds, because you will never build something you secretly despise. You will start the captive and stall on the funding. You will join the ownership group and never read the operating agreement.

Consciously you want the asset. Unconsciously you are ashamed of it. The two cancel out, and a physician running at net zero on the most consequential decision of her career is the most profitable thing the rest of the system has ever met.

THE NUMBER

Put a figure on it. Avalere studied the five specialties that built independent medicine, cardiology, gastroenterology, medical oncology, orthopedics, and urology, and counted how many physicians still practice unaffiliated, owning their own shop. The answer for 2022 is 12%. The range runs from 5% in medical oncology to 16% in urology.

That is not a profession that lost a fair fight.
That is a profession that got acquired.

By 2022, 45% were affiliated with a hospital, 37% with a corporate entity, 6% with private equity.

The other 88% did not stop being good doctors.
They stopped being owners.

Avalere ran those numbers in September 2024. The same study priced what the affiliation costs, and we will reach that figure, because it is the receipt that explains the entire acquisition.

THE POOR MAN’S WISDOM

There is a sentence about this, roughly 2,500 years old.

A small city, few people in it. A great king besieges it and builds his works around it. Inside the walls lives one poor wise man, and by his wisdom he delivers the entire city. He is right. He saves everyone.

Then the line: no man remembered that same poor man. And the verdict, worth carving into the inside of every white coat. The poor man’s wisdom is despised, and his words are not heard.

Consider who wrote it. Tradition gives the book to the wisest man who ever lived. A king with every resource, every result a person could accumulate, writing near the end of a life that left nothing untried. He was not poor. He had no reason to flatter the poor. The line he chose to leave behind was that the poor man’s wisdom gets discarded anyway, not because it is wrong, but because of the status of the person holding it.

You are the poor wise man. You have correctly diagnosed a broken system. You are the only one in the building with the wisdom to deliver the city. And your words are not heard, because you arrived with a credential and no capital, and the room runs on capital.

That is the real shape of your dependency. Not only that you answer to the hospital. That you cannot even be heard until someone with a balance sheet repeats what you already knew.

The four walls of your dependency, and the exact asset that takes each one down, sit on the other side of this line.

One hundred thousand readers a month move through The Rojas Report: physicians, healthcare executives, and lawmakers, who read it because the people taking your capital read it first. The deals get made before the press release, and you find out before, not after.

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Strip away the tax exemption, and Yale New Haven Health is a $7 billion corporation.

Strip away the charity claim, and it spends 0.69 percent on the poor.

Strip away the nonprofit filing, and you find a billion dollars in tax-free bonds, a half-billion-dollar building project, and a $ 23 million CEO payout.

There is nothing left to strip.

That was always the business.

IN TODAY’S ARTICLE:

• The “nonprofit” designation covers a seven billion dollar system that spent 0.69 percent of one hospital’s expenses on charity care.

• Yale New Haven Health reports operating losses and blames Medicaid, then spends $464 million a year on construction and ends the year with $606 million in cash.

• Tax-free bonds, property exemptions, 340B, and Disproportionate Share payments stack into a structural advantage no taxpaying competitor can match.

• Connecticut premiums climbed 16.8 percent for 2026 while the largest system in the state collected its exemptions.

Glossary at the bottom of today’s article.

THE NUMBER THEY DO NOT PUT IN THE BROCHURE

In fiscal 2021, Yale New Haven Hospital spent 0.69 percent of its total expenses on charity care.

Read that again.
Not 6.9 percent.
Not even one percent.
Sixty-nine hundredths of a single percent.

This is an organization the Internal Revenue Service classifies as a charity. A 501(c)(3). Tax-exempt on the theory that it exists to serve a public so underserved that the rest of us agree to forgo the taxes it would otherwise owe. That is the deal. That is the entire justification for the exemption.

Now set the charity number against the size of the enterprise. Yale New Haven Health is Connecticut’s largest health system. It reported total operating revenue of $7.24 billion in fiscal 2024 and $7.58 billion in fiscal 2025. A charity does not operate at that scale. A Fortune 500 company does.

The Lown Institute, a nonpartisan think tank, runs the math the hospital lobby hates. It calculates each hospital’s “fair share” by comparing the value of its tax exemptions with the amount it spends on charity care and community investment.

When a hospital takes more in tax breaks than it gives back, Lown calls the gap a fair-share deficit. Yale New Haven Hospital ran a deficit of $ 7.08 million. Bridgeport Hospital, also in the system, ran 9.67 million. Westerly Hospital in Rhode Island ran a deficit of 4.5 million.

The system did not fall short of its charitable obligation by accident.
It is built to.

Your hospital’s CFO already knows exactly what 0.69 percent of goodwill costs. You are finding out right now.

The Rojas Report reaches 100,000 readers a month: physicians, healthcare executives, and lawmakers.

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Last week, Health and Human Services (HHS) posted a stop sign.

THE GRACE PERIOD HAS ENDED.

The rule took effect five years ago.

Five.

IN TODAY’S ARTICLE:

• Why a five-year “grace period” is a green light, not a deadline

• The maximum fine that started at $110,000, for a hospital collecting billions

• The 27 fines, across two presidents, that prove the law was never built to bite

• What the dark actually costs you, in dollars

Glossary at the bottom of today’s article.

THE STOP SIGN

Last week the Department of Health and Human Services posted a stop sign on X. THE GRACE PERIOD HAS ENDED. Under it, a MAHA one-pager. Post your real prices. Comply with federal law. Hospitals that keep hiding prices will face consequences. More than 500 facilities notified. Fines up to $2 million. No further extensions.

Strong words.
Let’s test them.

The Hospital Price Transparency rule took effect on January 1, 2021.
The consequences HHS is now promising started April 1, 2026.
Count the years.
Five (5).

For five years the law sat on the books. For five years hospitals collected from you without telling you the price first. And for five years the agency that was supposed to enforce it treated the deadline like a suggestion.

That is not a grace period.
That is a green light.

THE PENALTY THAT STARTED AT NOTHING

Here is the detail that tells you everything about how serious Washington was.

When the rule went live on January 1, 2021, the penalty for breaking it was $300 a day. Flat. The same for every hospital in America. A rural 15-bed facility and a 900-bed flagship that collects billions in revenue faced the same fine. For a full year of hiding every price, the most any hospital could be made to pay was about $110,000.

A hundred and ten thousand dollars. For a giant system, that is not a penalty. That is a line item. You could break this law on purpose, all year, every year, and a hospital accountant would not feel it.

So hospitals did. By early 2021, CMS found that only 27 percent of hospitals were fully complying. By June of 2022, more than half of the country’s Medicare-certified general hospitals, 55 percent, still had not posted a usable file with their commercial negotiated prices. The law existed. The hospitals read the fine. They did the arithmetic. They stayed in the dark.

Only then, almost a year in, did CMS raise the stakes. Beginning January 1, 2022, the penalty increased to $10 per bed per day, up to $5,500 per day for the largest hospitals. For a full year, the new maximum reached $2,007,500. The minimum stayed at $109,500.

That is the number HHS now brags about on a stop sign. Two million dollars. Hold it against the defendants.

THE MATH

CommonSpirit Health is a nonprofit.
It runs 137 hospitals across 24 states.
In fiscal 2024, it collected $37.5 billion.

Run the division. The maximum fine for hiding every price, all year long, equals about 28 minutes of CommonSpirit’s revenue. Less than half an hour. For a violation that runs 365 days.

A $2 million cap against an operation collecting tens of billions is not a deterrent. It is a parking ticket on a Brinks truck. And remember, that ceiling only exists for the very largest hospitals. For most of the country, the maximum is far lower, and for the first full year of the rule, it was that flat $110,000 for everyone.

The penalty was never set to stop the behavior. It was set to be survivable.

Every health system has a press release about price transparency.
The Rojas Report has the fine count.
Twenty-seven in five years tells you which one to trust.

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Put 100 rural physicians in a room.

Ask who has heard of a Rural Emergency Hospital.
Not one hand goes up.

Now ask who decides whether their hospital becomes one.
Not one of them.

IN TODAY’S ARTICLE:

• The designation that decides a rural hospital’s future, and why the doctors inside it have never heard its name

• What an REH actually is: no inpatient beds, a 24-hour clock, and a contract that ships your sickest patients out

• Who knew, who didn’t, and why that gap is the mechanism, not the accident

• The lobby that called it a lifeline, then asked Congress to stretch it past rural.

Glossary at the bottom of today’s article.

THE ROOM THAT NEVER HEARD THE WORD

Last week, I asked a room of more than 100 rural physicians a simple question.
Who here has heard of a Rural Emergency Hospital?

Not one hand went up!

These are the physicians whose patients get transferred under the model.
The doctors whose jobs the model rewrites.
They had never heard the name.

That is not a knock on them. They diagnose and treat. Nobody briefs a working physician on Medicare provider-type rulemaking.

The people who do know about the Rural Emergency Hospital are large-system strategists, CMS staff, and the law firms those systems hire to write the contracts. The board signs. The doctors find out later, if they find out at all.

Hold that gap in your head.
The gap is the whole story.

WHAT IS AN REH?

Congress created the Rural Emergency Hospital in Section 125 of the Consolidated Appropriations Act of 2021. It added a new section to the Social Security Act (1861(kkk)) and switched the lights on January 1, 2023.

The deal is one trade. Give up every inpatient bed. Keep the emergency room and outpatient services. In return, Medicare pays you more.

Here is the more. A monthly facility payment of $285,625.90 in 2025, indexed annually by the hospital market basket. Plus 105% of the standard outpatient rate for covered services. Real money for a hospital bleeding out on negative margins.

Here is the trade behind the money. An REH cannot admit a single patient. It runs on a 24-hour average length-of-stay clock. It loses its swing beds. It loses 340B. And it has to sign a transfer agreement with a Level I or Level II trauma center before it can open its doors.

Read that last one again.
The rule that looks like patient safety is the rule that hands the hospital over.

Your CFO read the REH statute before your board did.
The system angling to absorb you read it first.

100,000 physicians, healthcare executives, and lawmakers read The Rojas Report so they are not the last to know.

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A federal program forces drugmakers to sell insulin to a clinic at a discount.

The clinic sends a patient to a Walgreens.
The patient pays the full retail price.

The discount is split among the hospital, the PBM, and the pharmacy chain.
The patient gets nothing. Illinois calls this “patient access.”

IN TODAY’S ARTICLE:

• How a discount meant for a poor patient becomes revenue for a billion-dollar system

• Why the “contract pharmacy” is a billing arrangement, not a building

• What Illinois SB2385 actually locks in, and who wrote it

• The one distinction the bill refuses to make, and why that refusal is the whole game

Glossary at the bottom of today’s article.

THE DISCOUNT THAT NEVER ARRIVES

Congress built 340B in 1992 to do one thing. Force drug manufacturers to sell outpatient drugs at a steep discount to the clinics and hospitals that treat the poor. The theory was simple. The safety net buys low, treats the uninsured, and spreads funds to care for people who cannot pay.

That is not what happens anymore.

The discount does not move to the patient. It moves to the entity, the contract pharmacy, and the middleman who administers the arrangement. The patient is the occasion for the discount. The patient is not the destination.

A CONTRACT PHARMACY IS NOT A PHARMACY

Start with the language, because the language is doing work.

A “contract pharmacy” is not a special building for poor patients. It is a billing relationship. A CVS, a Walgreens, an Express Scripts mail operation, signs a contract with a covered entity to dispense 340B drugs on its behalf. The chain takes a dispensing fee. A third-party administrator, often owned by a PBM, sits in the middle and takes a cut for matching eligible prescriptions to 340B inventory.

In 2010, HRSA guidance opened the door for covered entities to use an unlimited number of contract pharmacies. The result was not more care for the poor. It was a land rush.

Contract pharmacy arrangements exploded into the tens of thousands. And the growth did not chase the patients the program names. An Avalere analysis found that 340B contract pharmacies are located in less diverse, higher-income ZIP codes than the hospitals that own them.

A separate study in the American Journal of Managed Care found that the pharmacy ZIP codes had incomes 25 to 30 percent higher than those of the entities they served. The poor patient was still the legal key that unlocked the discount. The poor patient was rarely the one who benefited from it.

Everyone in healthcare has a take on 340B.
Almost no one can show you where the dollar actually lands.
The Rojas Report, lead by accountants, follows the dollar.
That is the entire difference.

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THE TWENTY-SEVEN-FOLD TELL

Here is the number that ends the debate about intent.

340B discounts ran roughly $66 billion in 2023. In 2005 they ran $2.4 billion. That is not growth. That is a twenty-seven-fold expansion in under two decades. At list price, the same purchases now total $124 billion, but the discounted figure is the money that actually changed hands, and it is the honest one to track.

The population of poor and uninsured Americans did not multiply twenty-seven times. The number of safety-net patients did not multiply twenty-seven times. What multiplied was the discovery, by hospital systems and the middlemen who serve them, that 340B is a margin engine wearing a charity costume.

Manufacturers put the markup at extreme multiples. PhRMA, citing an analysis by The Moran Company, claims hospitals collect an average of roughly 500 percent over their 340B acquisition cost on top drugs.

That attribution matters. It is the line between journalism and a press release. The figure may be directionally right. It is still their number, and their number carries their motive.

THE TWO ILLINOIS BILLS

Springfield has two 340B bills on the table. Read together, they tell the truth that neither tells alone.

The first is SB2385, with a House companion in HB3350. Sponsor: State Senator David Koehler. Its name is the “Patient Access to Pharmacy Protection Act.” It bars manufacturers from restricting 340B deliveries to contract pharmacies and from demanding pricing or claims data from covered entities and their contract pharmacies.

Strip the title. The bill does not lower a single patient’s copay. It does not require a single dollar of the discount to reach a single patient. PhRMA’s own witness, Jessica Lynch, told the House Executive Committee the quiet part. “This is not an access bill,” she said. On that narrow point, the drug lobby is correct, which is its own kind of warning about how confused this fight has become.

The bill protects the arrangement. It keeps the spread flowing and forbids anyone from looking at the data that would show where it lands.

Then there is the second bill, SB3878, the 340B Integrity Act, and this is the one that tells the truth by accident. State Senator Julie Morrison introduced it in February 2026.

SB3878 would force covered entities, beginning July 2026, to use 80 percent of the prior year’s 340B profits to lower what low-income patients actually pay at the counter. It would bar Medicaid from billing for 340B drugs starting in 2027. It would order a report on what 340B is doing to the Illinois state employee health plan.

Sit with the first provision.

You cannot mandate that 80 percent of the profit be returned to the patient unless you already know it does not. SB3878 is a confession in legislative form. The savings are not reaching the patient. Springfield knows it. One bill protects the gap. The other tries to close it.

THE DISTINCTION THE BILL REFUSES TO MAKE

This is where most coverage stops, and where the real story starts.

Not every covered entity is running an arbitrage. A federally qualified health center in rural Illinois with no pharmacy of its own is not a billion-dollar system. It genuinely relies on a contract pharmacy to get drugs into a patient’s hands, because building a dispensary it cannot staff is not an option. For that clinic, contract pharmacy access is survival, and the savings often do fund care for people who cannot pay.

The billion-dollar disproportionate-share hospital system running thousands of contract pharmacy arrangements across affluent suburbs is a different animal entirely. Same statute. Same word. Opposite reality.

SB2385 protects both. Identically.
It writes one rule for the rural FQHC and the multi-state system and refuses to tell them apart. That refusal is not an oversight. It is the design.

The large systems and their middlemen need the small clinic as a human shield, because “we are protecting rural safety-net clinics” is a far better headline than “we are protecting our margin.”

A physician sees the cost of this every day and never sees the cause. The independent practice down the road cannot run a 340B arbitrage. It buys drugs at real prices, competes against a hospital outpatient department buying the same drug at a fraction, and loses.

The discount that was sold to Congress as care for the poor has become a weapon against independent medicine. That is the part no one in Springfield is paid to say.

THE FIGHT IS NOT ABOUT ILLINOIS

Roughly twenty states have passed or are weighing contract pharmacy protection laws. Arkansas went first, and its law survived federal challenge in the Eighth Circuit. Manufacturers won the opposite ruling in the Third and DC Circuits on the federal question. The Seventh Circuit, which covers Illinois, has not ruled. That is why Illinois is contested ground, not settled.

The legal terrain is shifting beneath it all. In August 2025, the Second Circuit revived an antitrust case against insulin manufacturers, holding that coordinated contract pharmacy restrictions constituted a restraint of trade. HRSA issued guidance in the same month on a rebate model that would route 340B savings as a back-end payment rather than an upfront discount. Drugmakers want that model because it lets them see the claims data. Covered entities fight it because the data is exactly what they do not want seen.

Everyone in this fight is protecting a flow of money and calling it a principle. The drug manufacturer, protecting its revenue, calls it ‘program integrity’. The hospital system protecting its spread calls it patient access. Both want you watching the other one.

The patient, the one the program was built for, is not in the room. Neither is the independent physician. They are the line items everyone else is fighting to keep.

-Rojas out.

GLOSSARY

340B: A federal program from 1992 that forces drug manufacturers to sell outpatient drugs at a discount to clinics and hospitals that serve low-income patients.

Covered entity: A clinic, health center, or hospital eligible to buy drugs at the 340B discount. Ranges from a tiny rural FQHC to a multi-billion-dollar hospital system.

Contract pharmacy: A retail or mail pharmacy that signs an agreement to dispense 340B drugs for a covered entity. A billing relationship, not a special facility.

The spread: The gap between the discounted 340B price a covered entity pays and the full price collected when the drug is dispensed. The money in dispute.

PBM (pharmacy benefit manager): A middleman that administers drug benefits. Often owns or is tied to the third-party administrators that run 340B contract pharmacy programs and take a cut of the spread.

DSH hospital: A disproportionate-share hospital, one treating a large share of low-income patients. The eligibility door through which the largest systems entered 340B.

FQHC: A federally qualified health center. Community clinics serving low-income populations, often genuinely dependent on contract pharmacies because they have no dispensary of their own.

Rebate model: A proposed change where the 340B discount is paid back to the entity after the sale instead of taken off the price upfront. Manufacturers want it because it exposes claims data.

SOURCES

[1] HRSA, “2023 340B Covered Entity Purchases” (Oct 1, 2024). $66.3B in discounted purchases.

[2] National Alliance of Healthcare Purchaser Coalitions, “340B By the Numbers”. 2005 baseline.

[3] MedPAC, “Overview of the 340B Drug Pricing Program” (May 2015).

[4] IQVIA, “The 340B Drug Discount Program Grew to $124B in 2023” (2024). List-price value only, never paired against the 2005 discounted figure.

[5] PhRMA / The Moran Company, “New Analysis Shows Hospitals Mark Up Medicine Prices 500%” (Aug 2, 2023). Contested industry estimate, attributed as such.

[6] Avalere, “340B Hospital Child Sites and Contract Pharmacy Demographics” (Apr 18, 2022).

[7] American Journal of Managed Care, “Income Differences Between Locations of 340B Entities and Contract Pharmacies” (June 2023).

[8] Illinois SB2385, “Patient Access to Pharmacy Protection Act,” Sen. David Koehler (introduced Feb 7, 2025).

[9] Peter Hancock, “Bill expanding access to discounted drugs awaits House action,” Capitol News Illinois (Mar 4, 2026).

[10] Illinois SB3878, “340B Integrity Act,” Sen. Julie Morrison (introduced Feb 6, 2026).

[11] PhRMA v. McClain, 95 F.4th 1136 (8th Cir, Mar 12, 2024). Arkansas law upheld.

[12] Sanofi Aventis U.S. LLC v. HHS (3rd Cir, Jan 30, 2023). Manufacturer-favorable.

[13] Novartis Pharmaceuticals Corp. v. Johnson (DC Cir, May 21, 2024). Manufacturer-favorable.

[14] Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC (2nd Cir, No. 24-598, Aug 6, 2025). Revived under Sherman Act Section 1.

[15] HRSA 340B Rebate Model Pilot Program, 90 Fed. Reg. 36,163 (Aug 1, 2025).

[16] 340B Report, “2025 in Review: 13 States Enacted 340B Contract Pharmacy Access Laws” (Dec 18, 2025). Over 20 states total.

There is a hospital in Columbus that collects $6.76 billion a year and pays no tax.

Every private system in Ohio answers to the Attorney General before it can merge or acquire.

This one does not.

The reason is one word buried in the statute.

IN TODAY’S ARTICLE:

• The Columbus hospital that collects $6.76 billion a year and answers to no merger regulator

• The word in the statute that decides who gets reviewed and who walks free

• What “state instrumentality” buys you that “nonprofit” does not

• The blind spot every state with a flagship medical center shares

Glossary at the bottom of today’s article.

THE POWER MOST STATES DO NOT HAVE

Start with the part Ohio gets right.

Ohio sits in a club of eight. Under Ohio Revised Code 109.34, a nonprofit health care entity that wants to sell, merge, or transfer control of at least 20 percent of its assets must do more than send a letter. It has to obtain the Attorney General’s written approval. The Attorney General can approve. The Attorney General can block. If the deal gets disapproved, it does not close.

Take another gander.
Not notify.
Not comment.
Approve, or kill.

Forty-two states cannot do this. Most require a courtesy notice, and the Attorney General gets to write a strongly worded opinion while the merger closes anyway. Eight states hold the real lever: California, Massachusetts, Ohio, Connecticut, New Jersey, Oregon, Rhode Island, and Wisconsin. Ohio is on the short list of attorneys general who can stand at the courthouse door and say no.

And they use it. In June 2025, Attorney General Dave Yost conditionally approved the $485 million sale of Summa Health to a General Catalyst subsidiary, converting a nonprofit system to for-profit.

The deal closed later that year. In February 2026, the same office joined the Department of Justice to sue OhioHealth for forcing insurers into contracts that block cheaper health plans. The power is live. The office is awake.

So Ohio armed its regulator. The question nobody in Columbus asks out loud is who that regulator was armed to point at.

THE WORD THAT DECIDES WHO GETS REVIEWED

Here is the one word.

Section 109.34 reaches a “nonprofit health care entity.” The statute defines it narrowly: a hospital owned by a corporation organized under Chapter 1702 of Ohio’s nonprofit corporation law, or an entity exempt under Section 501(a) of the federal tax code. That is the cage. It was built for the private 501(c)(3). It was built for Summa. It was built for OhioHealth.

It was not built for the state.

The Ohio State University Wexner Medical Center is not a private nonprofit corporation. It is the medical center of a public university. A state instrumentality. A special purpose government entity.

It is exempt from federal income tax and local property tax not because it filed for charitable status, but because it is an arm of the State of Ohio.

That distinction sounds like paperwork.
It is the whole story.

A private nonprofit gets its tax exemption from the IRS and its merger oversight from the Attorney General’s charitable trust authority.

A state university hospital gets its exemption from being the government.

The 2025 audit says it plainly: the medical center is exempt from federal and state income tax as an integral part of the State of Ohio. Not as a charity. As the state.

So OSU’s acquisitions do not trigger the charitable-trust merger review under Section 109.34. The statute’s own definitions exclude the state’s hospital. The biggest hospital in central Ohio sits in the one gap the statute leaves, by design of the definition, not by anyone’s oversight.

THE HOSPITAL THE STATUTE WAS NEVER WRITTEN TO REACH

Look at the size of what is standing in the gap.

OSU Wexner posted record revenue of $5.99 billion in fiscal 2024. By fiscal 2025, total revenue reached $6.76 billion. That puts it in the same weight class as the systems the Attorney General does review. University Hospitals, a private system within the statute’s reach, collects $6.64 billion. OSU collects more. OSU files less.

And it has been growing. East Hospital. The Harding psychiatric hospital merger. Outpatient centers and joint ventures across the region. A $3 billion new inpatient tower under construction.

Every private system that grew that way in Ohio left a paper trail at the Attorney General’s office. The state’s own system grew alongside them, in the same market, competing for the same patients, under a different set of rules.

This is the blind spot.
Not a scandal of a signature given.
A scandal of a signature never required.

The deals get reviewed before they close, unless the buyer is the state.
Every private hospital in Ohio files for permission to grow.

The biggest one files nothing.
You can keep finding that out after the deal closes, or you can read it here first.

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WHAT ZERO TAX BUYS

Tax exemption is not a discount.
It is a head start that compounds every year.

OSU Wexner pays no federal income tax on $6.76 billion in revenue. It pays no property tax on a real estate footprint that, across Columbus nonprofit hospitals, the Lown Institute values at $992 million.

The statewide property tax exemption for Ohio nonprofit hospitals runs $419 million a year. The total annual tax break for the state’s nonprofit hospitals comes to $2.2 billion.

A physician-owned hospital across the street pays all of it. Income tax. Property tax. The full freight. Then it competes against an entity that pays none, files no merger paperwork, and carries the implicit credit of the State of Ohio behind its bonds.

There is no market in Ohio, only regulatory capture.

THE REGULATOR POINTED EVERYWHERE BUT HOME

The standard defense is that the IRS watches nonprofit hospitals. It does not, in any way that matters. The IRS has revoked a hospital’s tax exemption exactly once, in 2017, and the Government Accountability Office has spent years documenting that the agency has no real process to check whether these hospitals earn their exemptions.

The federal regulator is asleep.

That is why the Attorney General matters. Across the country, state attorneys general are the regulators with real teeth when it comes to nonprofit hospital behavior. Ohio’s has more teeth than most. The office can block a merger. It is suing OhioHealth right now. Vivek Ramaswamy is running for governor on a promise to make Medicaid fraud prosecution a top statewide priority, working through that same office.

So the tools exist.
The will exists.
The lever is in the room.

It has simply never been pointed at the state’s own $6.76 billion hospital, because the statute that built the lever was written to reach private nonprofits, and the state quietly stands outside its own reach.

THIS IS NOT AN OHIO STORY

Here is the part worth sitting with.

Ohio did not make a mistake unique to Ohio. It built a regulator to catch private nonprofit consolidation and left its public flagship outside the statute.

Michigan Medicine is a state instrumentality.
UVA Health is a state instrumentality.
UNC Health is a state instrumentality.

Every state with a flagship academic medical center built the same structure: a hospital that grows like a private system, collects like a private system, and answers to the merger regulator like a government, which is to say, it does not.

Ohio just happens to have the receipts on the table and an Attorney General with the power to read them.

The cage works.
It catches the private systems.
The largest one in the state walks past it every year, because the law that built the bars was never written to hold the state.

That is the blind spot. Over the next pieces in this series, we follow a single dollar through the system that sits inside it. Where it comes in. Where it gets harvested. Where it goes. And who is on the hook when it breaks.

-Rojas out.

GLOSSARY

ORC 109.34: Ohio’s hospital merger statute. It requires a nonprofit health care entity to get the Attorney General’s written approval before selling, merging, or transferring at least 20 percent of its assets. The Attorney General can block the deal outright.

Nonprofit health care entity: As the statute defines it, a hospital owned by a corporation organized under Ohio’s nonprofit corporation law (Chapter 1702) or exempt under Section 501(a) of the federal tax code. A private charity, not a government body.

State instrumentality: An arm of state government. A public university and its medical center fall in this category. It is tax-exempt because it is the government, not because it holds a charitable IRS designation.

Pre-approval authority: The power held by eight state attorneys general to block a nonprofit hospital merger before it closes, rather than only comment on it after the fact.

Section 6001: The federal Affordable Care Act provision that banned new physician-owned hospitals and froze growth at existing ones. It is why the state hospital faces no physician-owned competitor of comparable scale.

SOURCES

• Ohio Revised Code, Section 109.34, “Notice of transactions by nonprofit health care entity”

• Ohio Attorney General, “Charitable Transactions”

• The Rojas Report, “The 50-State Map: Only 8 Attorneys General Have the Legal Authority to Stop a Nonprofit Hospital Merger Before It Closes”

• Center for American Progress, “Empowering State Attorneys General To Fight Health Care Consolidation”

• The Ohio State University Wexner Medical Center, “Facts and Figures” (FY2025 total revenue, $6.76B)

• Columbus Business First, “OSU Wexner Medical Center posts record revenue in FY24” ($5.99B)

• Ohio Auditor of State, OSU Wexner Medical Center Health System Financial Statements (FY2025) (tax status, “integral part of the State of Ohio”)

• Lown Institute, 2024 Hospital Fair Share Spending Report, Ohio State Report ($2.2B total tax breaks; $419M property; $992M Columbus property value)

• U.S. Department of Justice, “Justice Department Sues OhioHealth for Anticompetitive Healthcare Contracts,” February 20, 2026

• Chief Healthcare Executive, “General Catalyst firm to close $485M purchase of Ohio hospital system” (Summa, AG approval)

• Healthcare Dive, “IRS revokes hospital nonprofit status for the first time” (2017)

• U.S. Government Accountability Office, GAO-20-679, “Tax Administration: Opportunities Exist to Improve Oversight of Hospitals’ Tax-Exempt Status” (2020)

• Vivek for Ohio, “Plan to Crush Medicaid Waste, Fraud and Abuse”

• Part 1: There Is a Congressional Committee That Sets the Prices for Your Profession

• Part 2: Fee-For-Service Inflation Was Not An Accident. One Man Designed It.

• Part 3: The Four People Who Solicit Donations From the Healthcare System They Regulate

You think nobody negotiates your drug prices because it’s complicated.

It’s not complicated.

It’s illegal.

A committee staffer wrote the ban, then billed drug companies $6 million.

IN TODAY’S ARTICLE

• Why the largest drug buyer in America is banned by law from negotiating prices.

• The committee staffer who came from Eli Lilly wrote Part D, then billed drug makers roughly $6 million.

• The CMS administrator who threatened the government’s own actuary to hide the cost from Congress.

• The cooling-off rule that made every one of these cash-outs legal.

Glossary at the bottom of today’s article.

IT’S NOT COMPLICATED. IT’S ILLEGAL.

Most people assume Medicare does not negotiate drug prices because drug pricing is a tangle. Rebates, formularies, pharmacy benefit managers, list price versus net price. A maze too complex for any agency to fight through.

That is the cover story.
Here are the facts, and they are undisputed.

Medicare is the largest drug buyer in the country. By law, it is forbidden from negotiating the price of a single pill.

Not “discouraged.”
Not “limited.”
Forbidden.

A federal statute bars the Secretary of Health and Human Services from interfering in price negotiations between drug makers, pharmacies, and the private plans that run Part D. The same statute bars the Secretary from setting a formulary or any price structure.

So the biggest customer in the market walks in with the most leverage anyone has ever held, and the law ties its hands behind its back.

That clause has a name. The noninterference clause. It is contained in the 2003 Medicare Modernization Act, the law that created the Part D drug benefit.

Somebody wrote that sentence.
Somebody fought for it.

And the men who did got paid.

Every name, every dollar figure, every date below comes from the public record. The Office of Inspector General. ProPublica. NBC News. The congressional roll call.

The people who built the most expensive drug program in American history wrote themselves a private exit, then walked through it.

Lawmakers on powerful committees count on you believing this is too complicated to follow. That is the whole defense.

100,000+ physicians and healthcare operators read The Rojas Report because they refuse to be the last to understand who took the money.

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I told you lobbying was bribery.

It is not.

Bribery is illegal.
Lobbying writes the law that keeps it legal.

The lobbyist does not slip an envelope under the table.
He hands the politician the bill, already written.

That is the design.

IN TODAY’S ARTICLE:

• The two-hundred-year history of lobbying, including the origin story Washington invented about itself.

• How the “education” lawmakers receive becomes the legislation they pass.

• The named actors who used this exact mechanism to ban physician-owned hospitals and push certificate-of-need across the country

• Why opting out of the game is not principle. It is forfeit.

Glossary at the bottom of today’s article.

THE STORY WASHINGTON MADE UP ABOUT ITSELF

Here is the version you have heard. President Ulysses S. Grant liked to slip out of the White House and into the Willard Hotel lobby for a brandy and a cigar. Favor seekers learned to wait for him there. Grant supposedly called them lobbyists, and the word was born a short walk from the Treasury.

It is a great story.
The Washington Post told it.
The Hill told it.
The Willard’s own publicist told it for decades.

It is also false.

The political sense of “lobby” traces to the English House of Commons. The Oxford English Dictionary cites it back to the 1640s, describing the room where the public went to reach their members. Americans were already using the term by 1808 in Philadelphia and, through the 1820s, around the New York Statehouse in Albany, generations before Grant arrived in Washington.

So the first thing to understand about the lobbying industry is this.
Its earliest product was a flattering story about itself.
If they will launder the word, sit with what they do to the law.

WHAT LOBBYING IS ACTUALLY

Most people hear “lobbying” and picture a crime.
Cash in a briefcase.
A bought vote.

Wrong frame.
Bribery is a felony.

Lobbying is a constitutional right. The First Amendment guarantees the right to petition the government for a redress of grievances, and lobbying is that right industrialized. The Lobbying Disclosure Act of 1995 even defines the job: someone who makes more than one contact with covered officials and spends at least 20% of their time lobbying on behalf of a client. It is legal, professional, and licensed by its own disclosure regime.

The danger was never the envelope.
The danger is the information.

A member of Congress votes on thousands of bills a year across subjects no human being could master. Tax. Defense. Drug pricing. Spectrum auctions. They are starving for expertise, and they will take it from whoever shows up holding it. The lobbyist shows up holding it. He brings the research, the data, the projections, and the model language already drafted into clean legislative text.

He does not buy the vote. He writes the question. By the time the bill reaches the floor, the hard work of framing it is already done, and it was done by the party with the most to gain.

That is the education function the brochures praise. It is also the capture.

HOW THE MACHINE RUNS

The machine is older than most of the monuments.

One of the earliest recorded paid lobbyists in the country was William Hull, hired in 1792 by Continental Army veterans to push Congress for the back pay they were owed. As the federal government grew, the industry grew with it, because every new power Washington took created a new reason to influence how that power got used.

The regulation followed the same pattern every time. Congress passed a rule. The influence adapted around it.

The Foreign Agents Registration Act arrived in 1938 to track foreign influence. The Federal Regulation of Lobbying Act of 1946 told lobbyists to register and report. In 1954, the Supreme Court gutted that law in United States v. Harriss, narrowing it to direct, in-person contact with members of Congress. The Lobbying Disclosure Act was broadened again in 1995. Then the Jack Abramoff scandal broke in 2006, involving a lobbyist convicted of defrauding clients and bribing officials, and Congress responded with the Honest Leadership and Open Government Act of 2007, tightening gift rules and disclosure requirements.

And every single time, the influence persisted. It changed clothes.

The registered lobbyist became the “strategic advisor.” The “consultant.” Shadow lobbying, where the people doing the work stay just under the legal definition so they never have to register.

Strip away the era, and the mechanism is identical. A client pays. The lobbyist trades access and pre-written language for a lawmaker’s attention. Money moves to campaigns through political action committees. And former officials walk through the revolving door to sell the relationships they built on the public payroll. None of it is illegal. All of it is the system working exactly as designed.

Every lobbyist on K Street charges $600 an hour to understand the game you are about to see laid bare.

Over 100,000 physicians and healthcare executives will read this article.

The cartel would rather you didn’t.

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Do you think a nonprofit hospital has to provide charity care?

It doesn’t.

The IRS deleted that requirement in 1969.

The tax break survived.

The charity became optional.

And the proof it offers in its place is graded by the hospital itself.

IN TODAY’S ARTICLE:

• The charity number your hospital shows you is a number it gets to define, and the industry admits it.

• In 1969, four years after Medicare and Medicaid were enacted, the IRS deleted the rule requiring free care.

• The exemption is not a bargain it underpays. It is the cheap capital that buys your competition and bills you more for it.

• The IRS has not stripped a single hospital of its exemption for failing to meet community benefit requirements in over a decade.

Glossary at the bottom of today’s article.

THE NUMBER THEY HAND YOU IS RIGGED

Ask a nonprofit hospital to justify its tax exemption, and it will not show you charity care. It will show you community benefit. A much bigger bucket.

In 2016, the industry reported community benefit at 13.7 percent of total hospital expenses. Roughly $76 billion in dollar terms. That is the number that ends up in the press release. It sounds enormous.

Look at what fills the bucket.
Free care to people who cannot pay is one line in it.

The larger pieces are something else.

The reported gap between what Medicaid paid and what the hospital says its costs were.

Health professions education.
Research.
Subsidized services.

Each one is a real expense. None of them is the free care for the uninsured patient you pictured when you heard the word ‘charity’.

Now the part that matters.

The hospital determines its costs. It picks the costing method. It can run a cost-to-charge ratio off its own chargemaster or use its own cost accounting, and it reports the result on a form it fills out itself, using its own definitions.

When it books the gap between Medicaid’s payment and its stated cost as a community benefit, the hospital writes the cost side of that gap. It defines the numerator. It chooses the method. It grades its own paper.

You do not have to take my word for it.

Take theirs.

When the Lown Institute reported that most nonprofit hospitals receive more in tax breaks than they spend on patient care, the American Hospital Association’s Rick Pollack pushed back, arguing that the critics had left out the Medicaid and Medicare underpayments hospitals absorb.

Read that again. The industry’s answer to “you spend less on charity than your tax break is worth” is “you forgot to count the money we say the government underpaid us.” That is the self-defined number, raised as a shield.

Strip the bucket back to the honest measure. Free or discounted care, delivered to patients who cannot pay, counted at cost. That number was about $16 billion in 2020. The exemption that same year was worth about $28 billion.

The thing the public actually bought, the free care, is smaller than the break. The bigger number the hospitals wave is the one they get to build.

Everyone in healthcare has an opinion about nonprofit hospitals. Almost no one can show you how the charity number gets built.

The Rojas Report, led by accountants, show you where the receipts live, and this receipt is self-reported. Subscribe

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The man who chairs the hospital board also runs the football team.

The hospital sponsors the football team.
The hospital pays rent to the football team’s real estate company.

The hospital’s community is owed $551 million it will never see.

This is not a coincidence.
This is the board of directors.

IN TODAY’S ARTICLE:

• Who sits on both sides of the Patriots sponsorship deal

• The $551 million deficit at two hospitals, running alongside an NFL contract

• The $8.4 million CEO, the $2 billion gain, and the 1,500 jobs cut months later

• The $50 million tax-deductible donation that closes the circle

• What the taxpayer subsidizes, and what the community gets back

Glossary at the bottom of today’s article.

BOTH SIDES OF THE TABLE

Start with the obvious question. Why would the New England Patriots take a marketing check from a charity? They do not need it.

A September 2025 stake sale valued the Patriots at $9 billion. Robert Kraft, who owns them, is worth nearly $14 billion. The Kraft Group owns the team, the Revolution, Gillette Stadium, and the Patriot Place complex. A nonprofit hospital’s sponsorship dollars do not move that needle.

So why do the deal?
Because the man who runs the Patriots also runs the hospital’s board.

Jonathan Kraft is president of the Kraft Group and the New England Patriots. He also chairs the board of trustees of Massachusetts General and sits on the board of directors of the parent company, Mass General Brigham. His brother Josh sits on the Brigham and Women’s leadership board.

The Patriots did not court a charity.
The charity’s chairman owns the Patriots.

THE DEAL

December 2021. Mass General Brigham signs on as the official sports medicine sponsor of the New England Patriots, the New England Revolution, and Gillette Stadium.

The marketing firm Boathouse Group built the campaign. The system stamped its name on a Center for Sports Performance and Research at Patriot Place. Branding. Game-day medical coverage. The full package, at the marquee franchise of the most valuable league in sports.

MGB framed it as a way to reach the community.
Hold onto that word.
The community is about to come up again.

THE DEFICIT

Here is the word the press release left out. Deficit.

Every nonprofit hospital makes the same trade.

The government waives its taxes. In return, the hospital pours that money back into the community. Charity care. Financial assistance. Subsidized services. That trade is the entire justification for the 501(c)(3) exemption.

The Lown Institute measured whether Massachusetts hospitals held up their end. They call the gap a fair share deficit. It is the amount a hospital receives in tax breaks above what it puts back into the community.

Massachusetts General Hospital ran a fair share deficit of $325 million a year.
Brigham and Women’s ran $226 million.

Combined, MGB’s two flagships shorted their communities by $551 million every year.

Fifty-eight percent of the state’s private nonprofit hospitals ran a deficit. Statewide, the gap reached roughly $1 billion a year. The Lown Institute noted that one number could wipe out every dollar of medical debt in Massachusetts.

That is the money.
That is what funded the Patriots deal.
It belongs to the community.

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Eli Lilly asked the hospitals one question.

Who received the discount?

Nearly one thousand of the largest systems in the country refused to answer.

The refusal is the confession.

In today’s article:

• The single question Lilly’s June deadline put to 340B hospitals

• Why the largest systems organized to refuse it

• The $66 billion spread that an honest answer would expose

• What the hospital lobby means when it says “safety net,” and who it leaves out

Glossary at the bottom of today’s article.

THE QUESTION

On June 1, 2026, Eli Lilly sent a letter to the head of HRSA, giving the holdout hospitals one week. Submit claims-level data on who actually received the 340B discount, or lose 340B pricing on Lilly drugs by June 8.

The drugs on that list are available at every safety-net pharmacy in the country. Mounjaro. Zepbound. Jardiance. Trulicity. Taltz.

Lilly did not ask the hospitals to return anything. It asked them to show their work. National Drug Code, dispense date, who got the unit. The same data every one of these systems already transmits to commercial insurers every single day.

The refusers were not rural clinics scraping by. They were the largest disproportionate-share hospital systems in the country, organized and coordinated through the American Hospital Association and 340B Health.

The biggest, best-funded systems in American medicine were asked to prove a discount written for poor patients reached poor patients. They organized to refuse.

THE SPREAD

Here is what an honest answer would expose.

In 2024, hospitals and other covered entities bought $81.4 billion in drugs at the 340B discount. The Drug Channels Institute, using HRSA data, estimated the gap between the discounted price and the list price at $66.4 billion that year.

That $66.4 billion is the spread. It is the money the discount creates. Congress wrote 340B in 1992 to stretch scarce federal resources for low-income and uninsured patients.

Nowhere does the statute require a health system to hand a single dollar of that spread to the patient standing at the counter.

So it doesn’t. Federal investigations and economic studies have shown that commercial contract pharmacies rarely pass the 340B discount to the uninsured. The uninsured patient pays full retail. The covered entity and the pharmacy chain split the spread.

And hospitals capture 87 percent of all 340B purchases. Not federally qualified health centers. Not Ryan White clinics. Hospitals.

The captured systems are counting on you to stop reading at the words “safety net.”

Over one hundred thousand readers did not.

That is the whole difference between understanding the spread and funding it.

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Adrian Smith,
Vern Buchanan,
Lloyd Doggett,
Greg Murphy.

The receipts are dated.
The conflict is structural.

IN TODAY’S ARTICLE:

• The four people on the Health Subcommittee, and the exact dollar amount each one took from the industries they price.

• The model in three moves: take the money, trade the stock, write the rule.

• The only MD in the room sold $750,000 in healthcare stock while seated at the table that sets its price.

• The $54 million dark-money campaign that fought over this committee’s jurisdiction, and who paid for it.

Glossary at the bottom of today’s article.

YOU KNOW THE COMMITTEE. NOW MEET THE PEOPLE.

Four people set the terms under which your profession is paid. Each one takes money from the hospitals, insurers, and drug companies they regulate. Several trade the same stock. Here are their names.

In Part 1, you learned the committee. House Ways and Means. The four levers it pulls on every dollar your profession earns.

In Part 2, you learned how the machine got built. Wilbur Mills wrote the architecture in 1965 and walked away. The structure outlived him.

Four people now sit on the Health Subcommittee. Vern Buchanan chairs it. They set the terms under which your profession is paid.

Each one takes money from the hospitals, insurers, and drug companies they regulate. Several trade the same stock.

There is no polite way to have this discussion.

This is not a story about one bad vote. It is a story about structure. The charge is not that anyone sold a vote. The charge is that the people who price your profession take checks from the priced and trade the priced equities while doing so.

The receipts are dated.
The
Read them.

This is Part 3 of a series on who regulates federal healthcare and who profits from your rising premiums and your rising costs. The committee. The architecture. Now the names, the receipts, and the trades. Subscribe here to read the rest and to support the work.

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You think reimbursement inflation is a bug.
It is the feature.

One man wrote it into the law on purpose.
He needed two lobbies to stop fighting.

So he paid them with language that never stops paying.

IN TODAY’S ARTICLE:

• How fee-for-service inflation was engineered, not inherited

• The cost-plus logic that pays a hospital more the more it spends

• Why the AMA, after fighting “socialized medicine” for a generation, suddenly went quiet

• The machine you inherited, and who designed it to leak

Glossary at the bottom of today’s article.

THE FIGHT YOU HAVE EVERY DAY STARTED IN A ROOM YOU NEVER SAW

You fight reimbursement every day.

The downcode.
The denial.
The rate that drops while your costs climb.
The sense that the math was rigged before you ever opened the claim.

It was.
It was rigged in 1965, in one committee room, by one man.

In Part 1, you met the committee. The House Ways and Means Committee. The committee that sits over the four levers that set what your work is worth: the tax treatment, the trust fund, the payment formula, and the rule that decides what the rest of Congress is even allowed to touch.

Today you meet the man who pulled all four at once. And you meet the two phrases he wrote that still decide who wins when you argue over a bill.

His name was Wilbur Mills.

THE TAX MAN WHO BUILT YOUR HEALTH SYSTEM

Wilbur Mills, Democrat of Arkansas, chaired Ways and Means from 1958 to 1974.

He was the most powerful figure in tax and health legislation of his era.
Nothing in his committee’s jurisdiction moved without him.
Not a rate.
Not a formula.
Not a comma.

Here is the part that matters to you.
Mills was not a doctor.
Mills was not a hospital man.
Mills was the tax man.

Medicare lives inside Social Security. Social Security is funded by the payroll tax. The payroll tax is the tax committee’s property. So the elderly’s health insurance landed on the desk of the man who controlled the tax code, not the man who controlled medicine.

That is the whole reason your payment formula was written by a politician and not a physician.

Mills initially opposed hospital insurance for the elderly. Then he made a colder calculation. If this was going to pass, he would author it himself, thereby controlling its shape.

He took control.
That control is the entire story.

THE THREE-LAYER CAKE

Going into 1965, three bills were on the table, competing with one another.

The Democrats wanted compulsory hospital insurance for the elderly, paid by the payroll tax. The AMA and its Republican allies countered with the Byrnes bill, sometimes called “Eldercare,” a voluntary plan to help pay doctors’ bills. And there was a third track, an expansion of welfare medical assistance for the poor, building on the earlier Kerr-Mills program.

Washington expected Mills to pick one.
Three bills enter, one bill leaves.

Mills did something nobody saw coming. He took all three and stacked them.
The Democratic hospital plan became Part A of the Hospital Insurance program.

The AMA’s own bill plan became Part B. Physician insurance.
The welfare expansion became Medicaid. Coverage for the poor.

He called it the “three-layer cake.” One bill, three layers, something for everyone who had been fighting.

Read what he actually did. He did not win the argument. He ended it. By handing every faction its own layer, Mills removed the reason to oppose. The hospital lobby got its layer. The physician lobby got its layer. The opposition dissolved because everyone got fed.

That is the architecture you bill into right now. Part A. Part B. Medicaid. Three names you say a hundred times a week. One man stacked them, on one afternoon, to make the fighting stop.

The bill that fused them was the Social Security Amendments of 1965. President Lyndon Johnson signed it on July 30, 1965.

Removing the opposition is not the same as fixing the problem. To get the lobbies to stop fighting, Mills had to pay them. And how he paid them is the part that still empties your pocket sixty years later.

The trade press will tell you fee-for-service inflation “emerged” in the decades after Medicare.

It did not emerge. It was authored, on purpose, by a man who needed two lobbies quiet.

This is where the architecture gets reported in language that makes the design obvious. 100,000+ physicians and operators read it.

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Four things govern your entire career.

What Medicare pays you.

What you owe the IRS.

Why the hospital buying your practice pays no tax.

One committee writes all four. You cannot name it.

IN TODAY’S ARTICLE:

• The four levers one committee controls: your Medicare pay, your income tax, the hospital exemption, drug prices

• How a payroll tax quietly hands your reimbursement to the tax-writers

• What “tax expenditure” means, and why $300 billion of it never shows up as spending

• Why $28 billion in hospital tax breaks bought only $16 billion in charity care

Glossary at the bottom of today’s article.

THE RATE DID NOT COME FROM A PHYSICIAN

Let’s skip the sugarcoating: the number Medicare pays you was not set by anyone who has ever treated a patient.

A health committee did not set it.

There is no health committee setting your Medicare rate. There is a tax committee. You have never heard its name. That is not an accident.

The committee is called the House Ways and Means Committee.
It is the oldest committee in Congress, seated in 1789.
Its job is revenue. Taxes. Tariffs. Trade.
And the programs that run on dedicated taxes.

Medicare is one of those programs.

So the committee that writes the tax code also determines your profession’s price. Most physicians practice an entire career without ever learning the name of the body that decides what their work is worth.

The cartel counts on complexity to hide in plain sight. This is the clearest example you will ever see.

HOW A TAX COMMITTEE BECAME YOUR HEALTH COMMITTEE

Here is the mechanism. It is the whole game, and it takes one paragraph.

Medicare Part A, the hospital insurance side, is funded by the Medicare payroll tax, the 1.45% line on every pay stub in America. Because dedicated tax funds fund Part A, it belongs to the committee that writes tax law.

That is what “jurisdiction” means. Jurisdiction is a committee’s exclusive authority over a subject. If a bill touches that subject, it dies unless it passes through that committee first. No detour. No floor vote around it.

Medicare runs on a tax. The tax committee owns the tax. So the tax committee owns Medicare.

The money comes in as a payroll tax. It goes out as your reimbursement. The committee that writes the tax writes both ends.

A tax committee controls your Medicare rate because Medicare is, structurally, a tax program. Read that twice. It is the sentence the entire system is built to keep you from understanding.

One point of accuracy, because receipts matter. Ways and Means does not own all of Medicare alone. It owns the tax-funded core, Part A, and shares Part B with the Energy and Commerce Committee. Medicaid sits entirely with Energy and Commerce. The tax committee owns the part that runs on the tax. That is enough.

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The easy story is that Vermont’s price board is toothless.

In September 2025,, it cut $88.5 million off the state’s largest hospital in one order.

It even clawed back one executive’s raise.

IN TODAY’S ARTICLE:

• What the board actually did to UVM Medical Center in 2025, by the numbers

• What it took to make a price board finally bite: a near-insolvent insurer, a new statute, and a public scandal

• Why running a monopoly’s budget line by line is not the same as a market

• The second hospital the board can never build, and the option nobody in the room will name

Glossary at the bottom of today’s article.

THE EASY STORY IS WRONG

The easy story about Vermont is that the state built a price board with no power to use.

It is wrong, and the people who repeat it have not read a budget order.

In September 2025, the Green Mountain Care Board cut eighty-eight and a half million dollars off the budget of the University of Vermont Medical Center, the state’s largest hospital, in a single decision.

It ordered the hospital to hold its revenue flat and cut its commercial insurance rates by 16%. It went line by line. It struck the sixteen million dollars the hospital’s parent network planned to ship to its hospitals in New York.

It deleted $465,000 set aside for a 9% raise for the network’s top executives. The hospital’s own chief executive said it was the first time in his career he had watched a commercial rate go down.

That is not a toothless board.
That is a board with teeth, biting hard, in public.

And it is the most damning thing about it.

Because once you accept that the board can do all of that, the comfortable explanation falls apart. The problem in Vermont was never that the regulator lacked power. The regulator has enormous power and proved it.

The problem is what that power actually is, what it took to make the board use it, and what it leaves standing when the cutting is done. All three answers are worse than a weak board would have been.

WHAT THE BOARD DID IN 2025

Start with the receipts, because they decide the argument.

On September 12, 2025, the board cut UVM Medical Center’s net patient revenue request by $88.5 million, a 4.5 percent reduction. Across all fourteen of Vermont’s community hospitals, it cut $94.6 million. The vast majority of that came from one hospital. The board approved eight other hospital budgets exactly as submitted. It aimed the knife at UVMMC on purpose.

On the commercial side, where the money that drives your premium lives, the board ordered UVMMC to hold net patient revenue flat and to lower its commercial insurance rate by 16%. UVMMC’s allowed charges to commercial insurers fell from a proposed $1.16 billion to an approved $1.07 billion.

Then the board did the thing regulators almost never do. It managed the hospital. It removed $16 million the UVM Health Network intended to move out of Vermont to its hospitals in New York. It removed $465,000 from the budget for a 9% raise for top network executives, in a year when the network was cutting frontline positions. The board’s chair, Owen Foster, said the network had become “physically and spiritually distant” from its mission and accused it of using inflated commercial rates in Vermont to subsidize its operations across the state line.

The rate side tells the same story. For 2026 marketplace plans, Blue Cross and Blue Shield of Vermont requested an average increase of 23.3 percent for individual plans and 13.7 percent for small-group plans. The board approved 9.6 percent and 4.4 percent. It cut the request roughly in half.

This is a regulator doing everything its defenders say a regulator should.
It named the monopoly.
It cut the budget.
It capped the rate.
It clawed back an executive raise.
It blocked money from leaving the state.
If administrative price regulation works anywhere, it should work right here.

You can watch a state cut a hospital’s budget and call it a win or you can ask why it had to? Only one of those is reporting. Subscribe.

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A business that keeps all the profit and absorbs none of the loss does not exist.

Except it does.

It runs your region’s largest hospital.

And it trained your doctor.

IN TODAY’S ARTICLE:

• How the university hospital captures every margin and offloads every loss onto the state

• The four extraction mechanisms: practice acquisition, facility fees, must-have pricing, and the 340B spread

• Why the state cannot let the system fail once it owns the region, and what that does to your tax bill

• Where this series goes next: the individual systems, one at a time, by name

Glossary at the bottom of today’s article.

THE BUSINESS THAT CANNOT LOSE

They told you the academic medical center serves three missions.

Care.
Education.
Research.

A public-spirited institution, too important to question.
Look at the balance sheet instead.

The modern university health system is a multi-billion-dollar conglomerate that solved the one problem every other business spends its life fighting. Risk. It captures the upside of a commercial monopoly and carries the downside of a public utility. When the margins come in, the system keeps them. When the losses come in, the state covers them.

Heads it wins.
Tails you pay.

That asymmetry is not an accident of the model. It is the model.

HOW THEY CAPTURE THE UPSIDE

The machine runs on four mechanisms.
Each one is legal. Together they are extraction.

One. They buy the competition.

The share of physicians employed by hospitals climbed from roughly 25% in 2012 to over 85% by 2024. University systems led the charge. UPMC alone controls more than 60% of hospital beds in Allegheny County and employs over 70% of the region’s physicians. The independent physician faces one choice. Sell the practice to the system, or get cut out of the referral networks and insurer panels the system already owns.

Avalere put a number on what survives. Across cardiology, gastroenterology, medical oncology, orthopedics, and urology, just 12% of practice remains unaffiliated and independent.

Two.
They reprice the same care.

When the system acquires your cardiologist’s office, it reclassifies that office. Nothing about the care changes. The billing does. Now the system collects a facility fee on top of the professional fee for the same service in the same room.

The NBER measured it. Hospital takeovers of physician practices drove prices up 14% to 19%, with no measurable improvement in outcomes. An echocardiogram that costs $350 to $500 in an independent office costs $1,200 to $1,800 after the facility fee. A routine colonoscopy doubles or triples.

Three. They become unavoidable, then price like it.

Once a system owns the region, no insurer can sell a plan without it. That is leverage, and the prestige brands use it. The RAND Hospital Pricing Study, Round 5, found prominent academic medical centers collecting between 250% and 450% of Medicare rates for the same services.

Sutter Health showed what enforcing that leverage looks like. All-or-nothing contracting. Anti-steering clauses. Sutter paid $575 million to California and its employers in 2021, then another $228.5 million in 2025 on the eve of a federal retrial. The playbook was the point.

Four. They run the drug spread.

Congress built the 340B program in 1992 so safety-net hospitals could buy outpatient drugs at deep discounts and stretch scarce resources. The statute never capped what the hospital could collect from a commercial insurer for those same drugs. So the academic systems buy at a 25% to 50% discount, collect the full commercial price, and keep the difference.

Duke booked $282 million in 340B profit over five years. The program swelled into an $81 billion market by 2024. In April 2025, the HELP Committee report named Cleveland Clinic and Bon Secours Mercy Health for generating hundreds of millions in 340B revenue while passing no direct discounts to patients. Conti and Bach documented the tell years earlier. The new 340B clinics open in wealthier, better-insured ZIP codes, not the poor neighborhoods the program was written for.

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In 1998, President Bill Clinton parsed the word “is,” and the country laughed. The hospital lobby took notes.

Then hospital lobby parsed five words in the 340B statute and built an $81 billion program on the definitions.

The words were rural, nonprofit, safety net, community benefit, and patient. None of them means what Congress intended anymore.

IN TODAY’S ARTICLE:

• Five words in the 340B statute. What Congress meant when it wrote them. What they mean today.

• “Rural”: how 425 urban hospitals became rural between 2017 and 2023 and what they captured in the process.

• “Nonprofit” and “Community Benefit”: the Medicaid shortfall triple-dip that turns a pricing decision into philanthropy and collects three separate revenue streams from one line item.

• “Safety Net”: 78% of 340B dollars flowing to DSH hospitals, the category that includes MassGeneral Brigham and Ascension.

• “Patient”: 30 years, no workable definition. Every covered entity writes its own.

Glossary at the bottom of today’s article.

THE PLAYBOOK

Clinton’s answer was mocked as the most lawyerly evasion in American political history. Parse a single word. Change the meaning. Escape the consequence.

The hospital lobby watched that and thought: We can do this at scale.

Congress passed the 340B Drug Pricing Program in 1992. The statute runs 800 words. It contains five terms that carry the entire weight of the program’s eligibility architecture. Rural. Nonprofit. Safety net. Community benefit. Patient.

Congress did not define any of them with precision.

That omission is now worth $81 billion a year.

In the thirty years since 1992, the hospital industry has systematically lobbied, litigated, and regulated each of those five words into something Congress never intended. Not by breaking the law. By rewriting what the words mean. One definition at a time. One regulatory filing at a time. One court ruling at a time.

Clinton was defending himself. The hospital lobby was enriching itself. Same mechanism. Different stakes.

The patient pays the bill.

RURAL

Congress wrote the lower 340B eligibility threshold for rural referral centers to help large regional hospitals that genuinely served rural patient populations.

Three hospitals held dual urban-rural classification under Medicare in 2017.

By 2023, 425 hospitals held it.

Yang Wang at the Johns Hopkins Bloomberg School of Public Health led the research. Health Affairs published it in August 2025. The data came from official CMS Medicare cost reports and impact files covering 2013 through 2023.

Here is what the data found at the top of the list.

NewYork-Presbyterian Hospital. 2,850 beds.
Nearly $9.3 billion in net patient revenue.
Classified as rural for Medicare purposes.

Cleveland Clinic.
$7 billion in revenue.
Classified as rural.

UCSF Medical Center, San Francisco.
$6.1 billion in revenue.
Classified as rural.

AdventHealth Orlando.
$6.2 billion in revenue.
Classified as rural.

Cedars-Sinai Medical Center, Los Angeles.
$4.3 billion in revenue.
Classified as rural.

The mechanism was a 2016 CMS rule change following two federal appellate court rulings. Urban hospitals could now carry both urban and rural classifications simultaneously. Urban wage index for Medicare payment. Rural eligibility for 340B. The same address. Two definitions. Zero tradeoff.

Rural Referral Center 340B purchases jumped 405% from 2017 to 2022, reaching $1.3 billion. That is more than the combined 340B purchases of critical access hospitals and sole community hospitals combined. The two categories for which Congress actually wrote the rural framework.

Congress wrote the word rural for Madelia, Minnesota. NewYork-Presbyterian collected it in Manhattan.

The AHA formally registered H.R. 7409, the Defend Rural Health Act of 2026, as a lobbying target in its Q1 2026 federal disclosure, filed April 20, 2026.

That same filing lists “rural reclassification policy” as an active lobbying concern. The bill to close the loophole is sitting in Congress. The AHA’s lobbyists are registered on it.

That is what the word rural means in 2026.

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206 rural hospitals have closed since 2010.

340B grew to $81 billion in the same period.

The program designed to save them was funding the machine that replaced them.

IN TODAY’S ARTICLE:

• 340B grew to $81 billion while 206 rural hospitals closed. The program’s own data indicts the program’s defense.

• Where the $66.4 billion spread actually went: five publicly traded chains and PBMs, not safety-net communities.

• The dual-classification loophole: how urban hospitals reclassified as rural and captured benefits Congress wrote for critical access facilities.

• The receipts: named systems, named executives, named compensation figures, sourced from IRS Form 990 filings.

Glossary at the bottom of today’s article.

THE SCOREBOARD NOBODY READS

A small hospital in Waverly, Tennessee. Humphreys County. Rural. Struggling. Participating in the 340B program, Congress designed to stretch scarce resources for communities exactly like this one.

In fiscal year 2023, Ascension Saint Thomas Three Rivers Hospital captured $14,692 in 340B savings.

Ascension, the system that owns it, reported $28.3 billion in total operating revenue that year.

That is the 340B program. Not the press release. The program.

The American Hospital Association has one remaining argument for 340B: rural hospitals need it to survive. Take it away, and rural communities lose access to care. People get hurt. You are the villain.

The data runs the other way.

The Chartis Center for Rural Health tracks every rural hospital closure in America. Their February 2026 report counts 206 rural hospitals that have closed or converted to models that exclude inpatient care since 2010. That number includes the 18 that closed or converted in 2024 alone. It includes the accelerating pace of closures in Tennessee, Texas, Kansas, Mississippi, and Oklahoma.

206 rural hospitals are gone. 417 more are currently vulnerable to closure. 46% of all rural hospitals were operating at a negative margin in 2025.

340B grew every single year during this period. The program hit $81.4 billion in purchases in 2024, up 23% year over year. It has compounded at roughly that rate for the better part of a decade.

The program grew.
The rural hospitals died anyway.
The system isn’t broken.
It’s working exactly as designed.

$100M lobbying contrast → anger has a use → $49.99/$300 tiers → series tease → subscribe button.

THE HUMAN SHIELD

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