Banks speak of stability.

Defense contractors speak of national security.

Universities speak of access.

Health systems speak of community benefit.

The language is not always false. That is why it works.

IN TODAY’S ARTICLE

• Every protected industry adopts the moral language of those it depends on. Healthcare mastered this.

• Eight phrases carry market control inside moral packaging.

• The trick depends on your using the cartel’s language without noticing you have been recruited.

• Naming the trick is the first move in dismantling it. Friday’s piece names every captor.

Glossary at the bottom of today’s article.

THE TRICK

The most successful operation in American healthcare was not financial. It was linguistic.

Two generations of well-meaning people now believe opacity equals morality. Price secrecy seems like compassion. Consolidation is seen as care. A tax exemption is viewed as a charitable act. A denial gets treated as a clinical decision. A non-compete is deemed a credentialing standard.

None of those sentences are true.
All of them are normal.
The gap between truth and normal is where the extraction lives.

This is not an accident of language.
This is the language doing what it was built to do.
The trick is older than healthcare.

Every protected industry eventually learns to speak in the moral vocabulary of the people it depends on. Banks borrow the language of stability because no one wants their savings to vanish. Defense contractors borrow the language of security because no one wants to be invaded. Universities borrow the language of access because no one wants to be the parent who denies their child a future.

Healthcare borrows the language of compassion because no one wants poor people to die.

The moral instinct in every case is real. That is what makes the capture possible. You cannot run this play on an industry the public is indifferent to. You can only run it on an industry the public refuses to let fail.

The public refuses to let healthcare fail.
So healthcare cannot fail.
So healthcare’s failures get renamed.

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THE SEPARATION YOU WERE NOT MEANT TO MAKE…

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Two health systems stand at the center of the Arizona Cardinals’ practice field.

Dignity Health, a division of CommonSpirit Health, holds 10-year naming rights to the Tempe training facility. Banner Health is the Cardinals’ official healthcare partner.

Combined, they employ over 220,000 people and generate over $56 billion in annual revenue.

Neither pays federal income tax.

One just “transitioned” 351 jobs at a Colorado hospital and closed its emergency room. The other owes its communities $923 million in undelivered community benefits.

Both write checks to the NFL.

This approach represents market capture, structured through a 501(c)(3) nonprofit model.

IN TODAY’S ARTICLE:

• CommonSpirit’s $923 million fair-share deficit: the single number that indicts the entire nonprofit hospital model

• The Oxnard picket line and the Cardinals practice facility: one image, two facts, one argument

• Peter S. Fine ($8.57M), Amy Perry ($4.58M), Lloyd H. Dean ($35.4M in one year, $95M across four): the roster

• Why the NFL-healthcare alliance isn’t charity, it’s market domination wearing a jersey patch.

Glossary at the bottom of today’s article.

THE PICKET LINE AND THE RIBBON-CUTTING

On April 29, 2024, SEIU-UHW workers stood outside Dignity Health St. John’s Medical Center in Oxnard, California.

Their signs said it plainly. The hospital was outsourcing cardiac monitor technician jobs. Shipping them to Arizona.

Monitor technicians read continuous cardiac telemetry. They are the people who see the arrhythmia before it becomes a code. Outsourcing that function is not an administrative cost-cutting measure. It is a patient-safety decision dressed up as a budget line.

CommonSpirit Health, Dignity’s parent, was losing money. They needed to trim. And they found their trim in the people who watch your heart.

Ten months later, on February 21, 2025, Cardinals owner Michael Bidwill stood in Prescott Valley, Arizona, alongside Dignity Health executives, alumni Cardinals players, the team’s cheerleaders, and Big Red the mascot.

Grand opening of the Dignity Health Sports Medicine Clinic in Yavapai County.

The jobs went to Arizona.
The marketing budget followed.

This is the entire case: jobs moved, marketing dollars followed.
The rest supports this argument.

THE $923 MILLION QUESTION

CommonSpirit Health runs 138 hospitals and 2,300 care sites across 24 states. It employs over 160,000 people. It generated $40 billion in revenue in fiscal year 2025.

It also reported operating losses of $225 million in FY2025 and $875 million the year before.

CommonSpirit pays no federal income tax. No state income tax. No property tax.

In exchange, they are supposed to serve their communities. That is the arrangement. That is the contract behind every dollar of tax exemption they collect.

The Lown Institute measured whether they kept their end of it.

Their 2024 Hospital Fair Share Spending report found that CommonSpirit’s tax breaks exceeded its meaningful community investment by $923 million. That is not a rounding error. That is the largest fair-share deficit of any health system in the United States.

CommonSpirit’s answer to that number is $5.2 billion in reported community benefits for FY2025. They count the unpaid cost of Medicare and Medicaid in that figure.

Let the reader decide whether Medicare underpayment is a community gift or a billing shortfall they had no choice but to absorb.

The Lown Institute decided. $923 million in the red.

And still, 80% of nonprofit hospitals nationwide spent less on financial assistance and community investment than the value of their tax breaks, per the same 2024 Lown report.

CommonSpirit’s practices set the standard; they are representative, not an exception.

This is the first article in a 32-team investigation.
One NFL franchise per week.
The structure is the same everywhere.

The names change.
The consolidation playbook isn’t secret.
It’s just not reported in language that makes the trade obvious.
Until now. Subscribe.

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There are four players in every 340B headline.

Manufacturers.
Covered entities.
Contract pharmacies.
HRSA.

Three of them are at war with each other.
The fourth has issued exactly one binding regulation in three decades.

There is a fifth player.

The fifth player has the statute, has the authority, has the enforcement record, and has not yet been asked the question.

This article is the question.

IN TODAY’S ARTICLE:

• Why the four-player map is missing a regulator, and why that omission is the entire game

• The four ERISA hooks that already reach the 340B spread on every commercial claim

• The five companies that sit on multiple sides of the same transaction, and the disclosure column that does not appear in any of their 408(b)(2) filings

• What the courts have already said, what the cases now in federal court are testing, and what the agency that has not yet acted can do without new law

Glossary at the bottom of today’s article.

THE MAP IS MISSING A REGULATOR

The Quiet $81 Billion laid out the four players in every 340B headline.

Manufacturers.
Covered entities.
Contract pharmacies.
HRSA.
That map is correct. It is also incomplete.

The map describes the upstream half of the program.

The relationship between the manufacturer and the covered entity. The price. The discount. The dispensing arrangement. The audit posture. HRSA enforces that side, with the regulatory ambition of an agency that has issued one binding rule since 1992 and treated everything else as guidance.

The downstream half of the program does not appear on the map.

The downstream half, what happens after the drug leaves the pharmacy and reaches patients with commercial insurance or employer coverage, remains unaddressed on the current map.

The downstream half is what happens after the 340B-acquired drug is dispensed to a patient who is not a Medicaid beneficiary. The patient with commercial insurance. The patient on the self-funded employer plan.

The plan that paid full negotiated rate for a drug acquired at the ceiling price. The spread that was retained by parties affiliated with the entity that adjudicated the claim.

That half of the program has no regulator on the four-player map.
It has a regulator on the actual federal organizational chart.

The regulator is the Department of Labor. The agency inside Labor is the Employee Benefits Security Administration. EBSA. The statute it enforces is the Employee Retirement Income Security Act of 1974. ERISA. The reach of that statute, on the conduct described in the rest of this article, is the entire downstream half of the program.

There is no statutory amendment required to bring it into the picture.

There is one regulatory act required.
The act is asking.

ROUGHLY 65 PERCENT

Roughly 65% of Americans with employer-sponsored coverage are in a self-funded plan.

That figure is the population this article is about.

A self-funded plan is a plan in which the employer assumes the financial risk for claims rather than purchasing insurance from a carrier. The employer hires a third-party administrator to process claims, manage the network, and handle the back office.

The TPA is usually a subsidiary of one of the major insurance carriers.

Aetna.
Anthem.
Blue Cross Blue Shield
Cigna.
United Healthcare.

The same carrier that sells fully-insured products in the same market also sells administrative services to self-funded plans in the same market, often using the same network, the same claims platform, and the same affiliated PBM.

Every self-funded plan in America is governed by ERISA.
Every self-funded plan in America has a fiduciary.

The plan sponsor is a fiduciary.
The trustee is a fiduciary.
The committee that selected the TPA is a fiduciary.

The TPA, when it exercises discretion over plan assets, is a fiduciary, whether the contract calls it one or not.

Every self-funded plan in America has paid for at least some 340B-acquired drugs in the last twelve months.

Almost none of them have received a disclosure that says so.

That is the gap in disclosure and oversight.
That, precisely, is the kind of conduct ERISA already reaches and governs.

THE FOUR HOOKS

ERISA reaches the conduct through four sections. Each section is a separate cause of action.

Section 404. The Duty of Loyalty and Prudence.

Every plan fiduciary discharges duties solely in the interest of plan participants and beneficiaries. The fiduciary acts with the care, skill, prudence, and diligence of a prudent person familiar with such matters.

The plan sponsor is a fiduciary. The TPA is a fiduciary when it exercises discretion. The standard is functional. The contract cannot opt the fiduciary out.

Section 406. Prohibited Transactions.

A fiduciary cannot cause the plan to engage in a transaction that constitutes a transfer of plan assets to a party in interest. A fiduciary cannot deal with plan assets in the fiduciary’s own interest.

When a TPA decides what the plan pays a pharmacy for a 340B-acquired drug, and the spread on that claim flows to the TPA’s affiliated PBM, the transaction has a party in interest, a transfer of plan assets, and a fiduciary’s interest. Three out of three.

Section 408(b)(2). Service Provider Compensation Disclosure.

A service provider must disclose all direct and indirect compensation received in connection with the services. The Consolidated Appropriations Act of 2021 amended this section to extend the obligation explicitly to brokers, consultants, and service providers to group health plans. Effective December 27, 2021.

Indirect compensation includes float. It includes spread. It includes any payment received from any third party in connection with the services.

The PBM’s retention of spread on a 340B-acquired drug, dispensed through a contract pharmacy administered by the PBM, on a claim adjudicated by the PBM, is indirect compensation in connection with the PBM’s services to the plan.

The PBM is required to disclose it.

Section 502. Civil Enforcement.

Plan participants and beneficiaries can sue. The Department of Labor can sue. Recovery includes losses to the plan, equitable relief, and attorney’s fees.

Four sections.
One statute.
One conduct.
One enforcement structure.

The conduct is the retention of compensation that the statute requires to be disclosed.
The disclosure has not been made.
That is the cause of action.

FIVE COMPANIES, ONE PARENT

The contract pharmacy economy is not distributed.

It is concentrated.

The top five companies controlled 76.1% of all 340B contract pharmacy relationships in the United States as of 2025.

Those five are CVS Health, Walgreens, Cigna, UnitedHealth Group, and Walmart.

CVS Health owns CVS Caremark, the country’s largest PBM. CVS Health operates the country’s largest retail pharmacy chain. CVS Health owns Aetna, a major TPA to self-funded employer plans.

CVS Health is therefore on four sides of one transaction whenever a 340B-acquired drug is dispensed to a plan member through a CVS retail pharmacy that holds a contract pharmacy arrangement with a covered entity, on a claim adjudicated by Caremark, paid by a self-funded plan administered by Aetna.

Cigna owns Express Scripts, the second-largest PBM in the country.
Cigna is a TPA.
Cigna is a carrier.

UnitedHealth Group owns OptumRx, the third-largest PBM.
UnitedHealth Group owns United Healthcare, a TPA and a carrier.
UnitedHealth Group also owns specialty and retail pharmacy operations.

Three of the five top contract pharmacy operators are vertically integrated insurance carriers that also adjudicate the claim, also administer the contract pharmacy program, also receive the rebate, also retain the spread, and also act as service provider to the plan that paid for the drug.

Same parent company.
Multiple sides of one transaction.
Each side generates compensation.
Each compensation flows back to the parent.

The Senate HELP Committee documented one slice of the conduct in its April 2025 report. CVS Health charges insured patients dispensing fees as high as $44 per prescription for brand-name drugs. CVS Health charges uninsured patients $5 for the same dispensing service.

The patient with insurance pays nine times more than the patient without.

The plan absorbs the difference.

The disclosure does not name the asymmetry. The disclosure does not name the spread. The disclosure does not name the related-party flow.

The disclosure was not made.

The carriers know which agency reads this work.
Their lobbyists have spent the last six months making sure their disclosures are clean. Yours are not.

Support us here.

WHAT THE COURTS HAVE ALREADY SAID

The carriers spend more money fighting the functional fiduciary question than any other ERISA issue of the last decade.

The reason is mechanical.

If a TPA is a functional fiduciary, the TPA is personally liable. Not the plan. Not the employer. The TPA, with its own balance sheet on the line for losses to the plan, with its own executives subject to ERISA Section 502 personal liability, with its own corporate insurance unable to indemnify against the breach.

The doctrine predates the 340B contract pharmacy economy.

In 2014, the Sixth Circuit decided Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan. BCBS Michigan administered the Hi-Lex self-funded plan. BCBS Michigan added hidden fees to claims that increased what the plan paid. BCBS Michigan retained the fees and never disclosed them.

The plan sponsor sued.

The Sixth Circuit found that BCBS Michigan was a functional fiduciary because it exercised discretion over plan assets in setting and retaining the hidden fees. The verdict was upheld. BCBS Michigan paid restitution to the plan.

The Hi-Lex fact pattern is the 340B fact pattern.

The TPA exercises discretion over what the plan pays for a pharmacy claim. The TPA’s affiliated PBM retains the spread on the back end. The plan sponsor was not told.

The cases now testing the theory in federal court are Lewandowski v. Johnson & Johnson, filed in the District of New Jersey on February 5, 2024, and Navarro v. Wells Fargo, filed in the District of Minnesota on July 30, 2024.

Both name the plan sponsor’s own fiduciary committee as defendants. Both name the PBM. Both allege ERISA Section 404 breach for failing to monitor pharmacy benefit arrangements. Both allege the plan paid excessive prices for prescription drugs that included undisclosed compensation flows to affiliated parties.

Both cases were dismissed at the trial court level. Both are now on appeal. The Third Circuit will rule on Lewandowski. The Eighth Circuit will rule on Navarro. Two circuits, two opinions, one fiduciary theory.

That is the legal posture pharmaceutical benefit fiduciary breach has been waiting for.

The carriers are not waiting for the opinions.
The carriers are restructuring their disclosures right now.
You are not seeing those restructured disclosures.

THE COLUMN THAT IS MISSING

Pull the 408(b)(2) disclosure your TPA and PBM provided to your plan last year.

The disclosure has columns. Direct compensation. Indirect compensation. Compensation received from third parties. Compensation in the form of float. Compensation in the form of rebates. Compensation in the form of network rental fees.

Find the column that says “compensation received in connection with 340B-acquired drugs dispensed through contract pharmacy arrangements.”

You will not find it.
There is no column.

That is not because the compensation does not exist. It is because the PBM has determined, internally and without your knowledge, that 340B spread is not 408(b)(2)-disclosable compensation.

The PBM did not ask you.

The PBM did not file an interpretation request with EBSA. The PBM made the call alone, applied it across every plan it administers, and bet that no plan sponsor would ever ask the question.

Most plan sponsors have not asked the question because they do not know how.

That is the engineering of the conduct. The disclosure regime in which the conduct need not be disclosed because the disclosure has been pre-decided in the carrier’s favor.

That works only as long as nobody with enforcement authority asks.

THE OTHER REGULATOR

EBSA sits inside the Department of Labor.

It enforces ERISA.
Every section of it.
Every regulated entity under it.
Every self-funded health plan in the United States.

EBSA has the authority to interpret 408(b)(2) and to issue guidance on what constitutes indirect compensation. The agency issued a Field Assistance Bulletin in December 2021 establishing temporary enforcement policy on the new health plan disclosure requirements. The interpretive infrastructure exists. The enforcement machinery exists. The career staff exists.

EBSA has the authority to investigate plan fiduciaries and service providers. Its enforcement program has produced restitution to ERISA plans and participants in the billions of dollars over the last two decades, almost entirely on the retirement plan side.

EBSA has the authority to sue in federal court for ERISA violations. Section 502 gives the Secretary of Labor a private right of action. The agency’s litigation track record is established.

EBSA has the authority to refer criminal cases to the Department of Justice when the conduct rises to that level.

EBSA has the authority to require corrective action and restitution to the plan.

EBSA does not need new statutory authority to act on the conduct described in this article. The statute is ERISA. The amendment is the Consolidated Appropriations Act of 2021. The interpretive question is whether 340B-related compensation flows that have not been disclosed under 408(b)(2) constitute violations of the disclosure obligation.

That is a question EBSA has the authority to answer.
That is a question EBSA has not yet been formally asked.

The answer, when it arrives, reaches every PBM, every TPA, and every carrier-affiliated dispensing arrangement in the United States.

The PBMs know this.
The carriers know this.
Their lobbyists are working hard right now to make sure EBSA does not turn the page on which the question has been written.

You can find out what your TPA actually retained, in the form of a discovery request your lawyer files Monday.

Or you can find out two years from now, in the form of a complaint your employees file Friday.

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WHAT THIS TRACK COVERS

The Quiet $81 Billion is the primer for the manufacturer-versus-hospital war. Its parts walk through the rebate revolution, the astroturf operation, the Maine stay, and the IRA collision.

This is the primer for a different war.

The war on the downstream half of the program. The war that has not yet been declared in public, but is being prepared in the carriers’ compliance departments, in the plaintiffs’ bar, and in the docket of three federal courts.

This track covers four parts:

Part 1: The Functional Fiduciary Doctrine. Hi-Lex Controls and the question the carriers do not want answered. The Sixth Circuit’s 2014 reasoning applied line-by-line to the 340B fact pattern. The personal liability exposure for TPA executives. The reason the carriers spend more money on this issue than any other ERISA question of the decade.

Part 2: 408(b)(2) After the CAA. What Section 202 of the Consolidated Appropriations Act of 2021 actually changed. What “indirect compensation” actually means in the regulatory text. What the PBMs disclosed and what they did not. The interpretive question EBSA has the authority to answer.

Part 3: The Lewandowski Theory. Lewandowski v. Johnson & Johnson. Navarro v. Wells Fargo. The complaints, the trial-court rulings, the appeals in motion, the precedent that follows. The plan sponsors named as defendants alongside the PBMs.

Part 4: The Plan Sponsor Playbook. The questions a fiduciary asks the TPA, the PBM, the contract pharmacy administrator, and the broker. The contract amendments at renewal. The audit rights. The documentation that goes in the file. The structural alternatives for fiduciaries who want the duty done right the first time.

The four-player map is missing a regulator.

The map can be redrawn.
The system is not broken. It is working exactly as designed.
The design has a statute that reaches it.
The statute has a section number, an enforcement agency, and a private right of action.

The plan sponsor has a duty to use them.

Disclosure.

I am the plan sponsor of a self-funded employer health plan. I sit under the same ERISA Section 404 duty every plan sponsor described in this article sits under.

I have asked the TPA, the PBM, and the consultants the questions this article tells you to ask. I have read the 408(b)(2) disclosures my plan was given.

I have looked for the column that does not exist. The conclusions in this piece are the conclusions an operator reaches when the disclosures come back the way mine came back.

The reason I am writing about it is the same reason I asked the questions in the first place.

The duty does not pause.

-Rojas out.

SOURCES

ERISA, 29 U.S.C. §§ 1001 et seq.

ERISA Section 3(21), 29 U.S.C. § 1002(21).

ERISA Section 404, 29 U.S.C. § 1104.

ERISA Section 406, 29 U.S.C. § 1106.

ERISA Section 408(b)(2), 29 U.S.C. § 1108(b)(2).

ERISA Section 502, 29 U.S.C. § 1132.

Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, Section 202.

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, 751 F.3d 740 (6th Cir. 2014).

Tibble v. Edison International, 575 U.S. 523 (2015).

Lewandowski v. Johnson & Johnson, No. 3:24-cv-00671 (D.N.J. filed February 5, 2024). Dismissed without prejudice January 2025; appeal pending in the Third Circuit.

Navarro v. Wells Fargo & Co., No. 0:24-cv-03043 (D. Minn. filed July 30, 2024). Motion to dismiss ruled on March 3, 2026; Notice of Appeal filed April 1, 2026 (Eighth Circuit).

U.S. Department of Labor, EBSA. Field Assistance Bulletin 2021-03: Temporary Enforcement Policy on Service Provider Disclosures Under ERISA Section 408(b)(2). December 30, 2021.

U.S. Senate HELP Committee, Office of Senator Bill Cassidy, Chair. Congress Must Act to Bring Needed Reforms to the 340B Drug Pricing Program. April 24, 2025. (CVS Health $44 / $5 dispensing fee asymmetry.)

Drug Channels Institute. The 340B Contract Pharmacy Market in 2025: Big Chains and PBMs Tighten Their Grip. June 10, 2025. (Top five contract pharmacy concentration at 76.1%.)

HRSA Office of Pharmacy Affairs. 2024 340B Covered Entity Purchases Data. December 2024.

Manus AI. The 340B Drug Pricing Program: A Comprehensive Deep-Dive Report. March 2024.

Kaiser Family Foundation. 2024 Employer Health Benefits Survey. (Self-funded plan prevalence in employer coverage market.)

Your premium just went up.

Michigan Medicine just asked for a 44% raise.

Same week.

In today’s piece:

• Why the most prestigious hospital in Michigan is also the most expensive

• The 44% price demand exposed the cartel posture behind the institutional brand.

• Why federal reductions to projected DSH growth are changing how Michigan Medicine negotiates with commercial insurers

• What the receipts actually say about who Michigan Medicine serves

Glossary at the bottom of today’s article.

THE DEMAND

Michigan Medicine and Blue Cross Blue Shield of Michigan have a contract that expires June 30, 2026.

According to BCBSM, Michigan Medicine is demanding a 44% price hike over the term of a new contract. Michigan Medicine disputes this framing, stating that BCBSM initially proposed a 30% reduction in reimbursement. In response, Michigan Medicine says it has offered either single-digit annual increases or a contract extension tied to quality outcomes. Both sides publicly disagree on the core terms and claims.

The two sides are public and dueling, and 300,000 commercial BCBSM members across Michigan are caught in the middle. If the deadline passes without a deal, University Hospital, C.S. Mott Children’s Hospital, Von Voigtlander Women’s Hospital, the Frankel Cardiovascular Center, and the new Kahn Pavilion all go out-of-network on July 1.

Strip the spin off both press releases and look at the underlying setup.

Michigan Medicine is already the highest-paid health system in Michigan. BCBSM has stated publicly that Michigan Medicine charges roughly twice as much as other Michigan hospitals for procedures such as knee replacements. Same surgery. Same implant. Same recovery. Twice the price, because of the name on the building.

This is not a hospital fighting to keep the lights on. Michigan Medicine generated $8.7 billion in operating revenue in fiscal year 2025 and posted a $109 million operating margin while it was at it. The $920 million D. Dan and Betty Kahn Health Care Pavilion was scheduled to open in late 2025. The university’s total assets sit at $37.1 billion. Net position: $24.9 billion.

This all adds up to a system with a hedge fund balance sheet, now entrenched in a public negotiation with Michigan’s largest insurer. Every disagreement over dollars here inevitably influences employer premiums and employee paychecks statewide, tying hospital finances directly to public cost.

Michigan Medicine’s defense is that Michigan hospitals are reimbursed at the third-lowest rates in the country. That is true on average. It is also irrelevant when applied to the highest-paid system in the state, asking to be paid more.

A contract will be signed by June 30 that determines what every Michigan employer pays for health insurance next year.
You will not read it.
The Rojas Report will.
Support out work.

THE 209-YEAR LOOPHOLE

The University of Michigan was chartered in 1817. The charter granted the institution tax immunity. Every dollar that flows through the university and its hospital is protected by that immunity, shielded by a piece of paper older than the Civil War.

That immunity covers federal income tax. State income tax. Local property tax.
Every building Michigan Medicine operates out of, every parcel of land it leases or owns, every dollar of investment income that compounds inside its endowment, sits outside the tax base.

Michigan’s nonprofit hospital sector receives an estimated $1 billion in tax breaks annually. The average hospital exemption is $9.5 million. Michigan Medicine is the largest academic system in the state. The math from there is not subtle.

The real estate footprint magnifies this story. Michigan Medicine leases approximately 1.3 million square feet across roughly 60 locations and 120 leases. Yet this figure excludes university-owned buildings, which are also exempt from property taxes. Each parcel excluded from the tax base shifts the burden onto Ann Arbor homeowners, who cover the gap so the hospital pays none, another result of tax immunity.

Then there are the bonds.

Since 2008, the University of Michigan has issued more than $2.1 billion in tax-exempt bonds, much of it to finance health system expansion. Tax-exempt bonds carry interest rates significantly below what private companies pay. The interest savings are an additional federal subsidy, paid for by the Treasury, in service of an institution that already pays no taxes.

This is the architecture: a 209-year-old charter, a $1 billion sector-wide exemption, $2.1 billion in subsidized debt, and a real estate portfolio that passes its tax burden to Ann Arbor residents. Together, Such elements underpin Michigan Medicine’s financial structure.

The University of Michigan is not a hospital that is tax-exempt. It is a tax-exempt hospital.

THE CEO’s LILLY PROBLEM

In February 2026, The Michigan Daily published an investigation into former Michigan Medicine CEO Marschall Runge.

The reporting found that Runge failed to disclose his financial relationship with Eli Lilly in more than half of the research articles he authored while leading the system. Over his time on the Lilly board, he received more than $2 million from the company.

His base CEO compensation in 2023 was $1.64 million.

Stack the numbers. At Michigan Medicine, the CEO oversaw research priorities, formulary decisions, residency training, and clinical trial access, while simultaneously sitting on the board of a major pharmaceutical company. He collected checks and failed to disclose them in half of his papers—highlighting how leadership and financial incentives can intersect at the highest levels of academic medicine.

David C. Miller took over as CEO in July 2025. Whatever the new posture under Miller, the institutional question is the same. How did the disclosure gap survive that long, in that role, without internal compliance catching it?

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The church spends four million dollars a year on insurance. Property on three campuses. General liability. Workers compensation. Health benefits for the staff. Auto on the vans. Cyber. Directors and officers coverage for the board.

Four million dollars.
Every year.
From the offering plate.

The pastor preaches a fall sermon series on stewardship. He calls his congregation to tithe. He calls them to give faithfully, sacrificially, joyfully. He means every word of it. He does not mean for the offering to flow from the pew to the pulpit to the insurance broker. That is exactly where a great deal of it is going.

The congregation tithes to the church.
The church tithes to the carriers.

Meanwhile, forty minutes down the road, another non-denominational church is doing exactly the same thing. Five thousand members of its own. Same suburban demographic. Same insurance broker network. Same coverage stack. Same multi-million dollar line item. Two separate accounts. Two separate invoices. Two separate Sunday morning prayers asking God to provide.

The two pastors know each other. They have shared pulpits. Their wives are friends. Their children attend the same youth retreats. They have never once sat down and asked whether one shared benefits broker, one pooled property tower, one consolidated cyber policy might free up a million dollars between them. A million dollars that could fund the youth ministers, the missionaries, the food pantry, and the addiction recovery program that both churches keep meaning to launch.

It would not require a merger. It would not require theological agreement on every fine point. It would not require sacrificing a single minute of either pastor’s calling. It would require a phone call. Make that call. Reclaim what your ministry could do with just a conversation. This is the story of nearly every independent institution in America right now.

Independence and living on an island are two different things.

That sentence is the entire thesis. Read it twice if it did not land. Independence is a virtue. It is the soul of the American experiment, the soul of the Reformation, the soul of the small business, the soul of the family farm. Living on an island is not a virtue.

It is a vulnerability dressed up as a virtue.

It is what happens when an institution forgets that the calling that made it independent in the first place was always meant to be lived alongside its neighbors.

In the past year, I have spent the better part of my time sitting across the table from rural hospital CEOs. Sixty of them. Maybe a few more. They tell me the same story in different accents.

The hospital is bleeding cash.
The case mix is shifting toward older, sicker Medicare patients whose care costs more and pays less. The commercial mix has collapsed because the only large employer in town moved its headquarters to a metro. The state’s supplemental payments are a year behind. The 340B revenue that kept the lights on over the last decade is being squeezed from one side by drug manufacturers restricting access and from the other side by PBMs taking the spread.

The malpractice premium just renewed at a number the board could not believe. The cyber insurance carrier is demanding new attestations, but the IT director does not know how to answer. The local nurse pool has been bought up by a national staffing agency that now charges twice what the hospital paid two years ago.

And then they tell me what they are going to do about it.
They are going to call their senator.

That is the plan. The entire plan. They believe that the senator from their state is, to borrow from a movie they probably have not watched in thirty years, their only hope, the way the orphan believed it.

They have made it their theology.

Forty miles away, there is another rural hospital. Same Medicare mix. Same staffing crisis. Same property insurance carrier. Same payroll vendor. Same EHR. Same cyber attestation paperwork sitting on the same kind of desk in front of the same kind of CFO who is paid the same kind of salary to do the same kind of work twice.

The two CEOs know each other. They sit on the same state hospital association board. They have spoken at the same conferences. They have shaken hands at the same political fundraisers, where the senator, their only hope, thanked them both for their support.

They have never once picked up the phone to ask whether they could share a single back-office function. Not one. Not insurance. No benefits. Not purchasing. Not legal. Not compliance. Not even the contract review that both of their CFOs are doing this week on the exact same vendor agreement.

The cooperation that would lower their cost structure dramatically does not require a merger. It does not require legislative permission. It does not require a 501(c)(3) reformation. It does not require a consultant. It only requires one decisive action: make the phone call now.

The phone call does not get made.

It would happen tomorrow morning if it happened at all. That is what is hardest about this. The savings are not theoretical. They are not five-year strategic horizons. They are not contingent on a national policy reform that may or may not materialize after the next election cycle. They are tomorrow. Pool the property insurance, the benefits, the cyber, the malpractice, the purchasing, and the payroll vendor. Take action. Pool the resources. Cut expenses. Free up capital to keep the labor and delivery unit open. Do it. Tomorrow.

Instead, the CEO is on the phone to Washington asking the wrong person for help, and the wrong person is happy to provide just enough to keep him asking.

But this dynamic is not limited to hospitals.
This is the American small enterprise problem in microcosm.

Manufacturing. I have sat with the second- and third-generation owners of foundries, machine shops, plastic injection operations, and food processors. Despite being in similar industries, each one is running a back office that looks like it was assembled by a different person in a different decade, with a different ERP. In addition, each has a benefits broker who has been with the family since the founder’s funeral. Furthermore, each is buying the same steel, the same resin, the same packaging from the same regional suppliers, alone, at prices the suppliers set because no single buyer is large enough to push back.

Commercial real estate. Operators with eight buildings, twelve, and twenty. Each one carries property insurance separately. Each one buys cleaning, landscaping, security, and energy separately. Each one negotiates with the same regional contractors who have figured out exactly what each operator will tolerate paying. The operators know each other. They sit on the same chamber boards. They will not pool any line items.

State chartered banks. Community banks with a hundred million in assets, two hundred million, five hundred million—each one running its own compliance shop, its own fraud detection, its own core processing renewal, its own regulatory examination prep. Yet each one is losing market share to a credit union down the street that, almost by definition, is a cooperative. After all, the credit union figured out a hundred years ago what the community bank refuses to consider this morning.

Restaurants. Last month, I presented to sixty independent restaurant owners at an association meeting. Most of them are in the same metro area, all paying retail to the same food distributors, using the same uniform service, the same payroll processor, the same point-of-sale vendor, and the same insurance broker. Yet, not a single one of them had ever considered pooling their property insurance with the others in the room.

These are not unintelligent people.
They run businesses on margins that a hospital CFO would call impossible.
They negotiate every line item daily.
They survive seasons that would crush most enterprises in a quarter.
They are not dumb.
They have simply never been asked the question in a way that demanded an answer, so the answer never came.

Chains they compete with buy at scale and crush them on the cost of goods. Independent restaurateurs blame the apps, inflation, rent, and customers who will not tip. They do not call each other.

Independent medical practices. Same story. Six-person orthopedic group with its own HR. Three-person ophthalmology practice with its own administrator. The hospital across the street that just bought its largest competitor pools all of it. That is part of why the hospital was able to write the check.

Physician-owned hospitals are the strangest case of all. The owners are co-investors across multiple facilities; they already share an investment thesis. Together, they regularly gather in conference rooms, sit on the same boards, sign operating agreements, and distribute the same K-1s. However, when it comes to insurance, commercial contracts, and benefits, each handles them separately for each facility. Most have never even heard of the cooperative ownership structures American farmers and credit union members have used for a hundred years to handle such matters together.

I have interviewed nearly 1,000 business owners over the last 60 months. The pattern does not change. When I ask them why they do not cooperate, the answer is almost always the same. It is not philosophical. It is not ideological. It is not even strategic.

It is, “this is the way we do it.”

That is the diagnosis. They do not refuse to cooperate. They have never thought about it. The question has never been put to them in a way that demanded an answer. The inheritance was independence in isolation, and they confused the inheritance with the calling.

Here is what makes the diagnosis painful.

America used to know.

The farmer who got electricity in 1937 did not get it from a utility. He got it from a cooperative; he and his neighbors capitalized themselves because no investor would run a line out to a farm that was twelve miles from the nearest town. The rural electric cooperative is one of the most successful private institutions in American history, and almost nobody under fifty knows what it is or how it was built.

The credit union exists because workers, often immigrant workers, often Catholic workers, often workers a commercial bank would not serve, pooled their savings and lent to each other. The credit union is a cooperative. It is older than many of the banks it now competes with. It is winning.

Mutual insurance companies exist because policyholders, not shareholders, own the risk pool. State Farm. Nationwide. Northwestern Mutual. Liberty Mutual in its origins. They were built on the same logic. The people who carry the risk should own the rails. They built some of the largest insurance companies in the country by refusing to surrender ownership to outside capital.

Agricultural cooperatives fed this country and still do. Land O’Lakes. Ocean Spray. Sunkist. Cabot Creamery. Each one is a federation of independent farmers who figured out that they could compete on the field and cooperate on everything else, and that this combination, not isolation, was the actual content of their independence. Their families still own their farms. They still make their own decisions. They are still independent. They are not on an island.

This is not a foreign concept to American business.
It is the foundation of American business.
We just stopped teaching it.

Somewhere in the last fifty years, the mythology shifted. The lone founder became the only acceptable archetype. The cooperative was reframed as a relic, or worse, as something vaguely socialist, which is a slander against an institutional form that was almost always built by deeply religious, deeply self-reliant, deeply independent people who happened to be smart enough to know that they could not buy electricity, lend money, or insure a barn alone.

The institutions that figured out how to cooperate built the country we inherited. The institutions that forgot are the ones now begging the senator for help, or asking the congregation to give a little more so the carrier can be paid.

What did cooperation produce for the institutions that figured it out?

It produced ownership that did not get sold.
The farmer who joined the rural electric cooperative in 1937 did not just get electricity. He got equity in the rails his grandchildren still depend on. The worker who joined a credit union in 1925 did not just get a loan. He got a share in an institution that now has assets larger than the bank that refused him service. The members of Land O’Lakes did not just sell butter together. They built a brand that the grocery chains have to negotiate with on the farmers’ terms, not their own.

It produced capital that stayed in the calling. Money that stopped leaving for the carrier, the broker, and the vendor stayed in the building. The youth minister got hired. The labor and delivery unit stayed open. The food pantry opened. The credit was extended to the small business that no national lender would touch.

It produced decision rights that stayed local. The farmer still made his own decisions on his own land. The worker still chose his own loan officer. The pastor still preached his own sermon. The physician still set foot in his own operating room. Cooperation on the unglamorous things preserved authority on the sacred ones.

The independents who never figured it out got something else. They got billed.

Independence is a calling.
The calling is real.

The pastor is called to preach.
The CEO is called to keep the labor and delivery unit open.
The physician is called to operate.
The restaurateur is called to feed her neighbors.
The banker is called to extend credit to the small business in his town that no national lender will touch.
The manufacturer is called to make the part.
These callings are sacred, in their way.
None of them is diminished by cooperation.
All of them are preserved by it.

Isolation occurs when you forget that the calling requires neighbors.

There is a grain elevator still standing in a small town in the upper Midwest. It has been standing for almost a hundred years. The farmers who built it are long dead. Their grandchildren still own it. The elevator is not the largest grain handling operation in the county. It is not the most modern. It does not move the most volume. It is still standing because the farmers who built it understood something that the institutions begging the senator for help today have forgotten.

Independence is not what you do alone.
Independence is what you protect together.

Sundays, a great day for introspection.

-Rojas out.

The Charlotte-Mecklenburg Hospital Authority operates as a “unit of local government” under North Carolina law.

This means it has powers similar to those of local governments, including the legal right of eminent domain, the power to acquire private property for public use, automatic property tax exemption ,exclusion from paying local property taxes, and immunity from certain antitrust laws, as recognized by the Fourth Circuit.

On Monday, May 4, that structure asks Wake County for permission to absorb its third major North Carolina hospital system in six years.
Remember: North Carolina is a Certificate of Need State.

Every hospital merger announcement uses the same words.

Strategic combination.
Stronger together.
Better serve the community.

The Atrium-WakeMed press release uses all of them. The Wake County agenda item, written by lawyers and not for the press, uses different words.

“WakeMed intends to convert from a non-member non-profit, a non-profit without an outside controlling party, to a single-member non-profit, where Atrium Health becomes the sole corporate member, the only organization with legal control over WakeMed, ensuring unified governance, consistent oversight, and alignment with system objectives.”

That is the deal.
The community is not the customer.

The community is the asset being conveyed.

IN TODAY’S ARTICLE:

• The press release language versus the agenda item language, and why both are technically true

• What “sole corporate member” of a non-profit actually means in practice

• Why Atrium does this through ‘combinations’—a term for integrating organizations without an asset purchase—instead of acquisitions, and how this structure avoided the same antitrust scrutiny that blocked its 2018 UNC deal.

• Why Treasurer Brad Briner went on record opposing the combination on the same day Atrium and WakeMed announced it

Glossary at the bottom of today’s article.

THE TWO LANGUAGES

There is the language of the press release. And there is the language of the agenda item.

The press release was issued on Friday, May 1. It says Atrium Health and Raleigh-based WakeMed have entered into a “strategic combination.” It says the combination will create $2 billion in capital investment in Wake County over ten years, more than 3,300 new healthcare jobs, and the state’s largest non-profit mental health network.

Donald Gintzig, the CEO of WakeMed, called it a “significant next step in building upon this legacy, expanding our impact and ensuring a thriving nonprofit health care future for all we serve.”

That is the language community hospitals use when they get acquired.

The Wake County agenda item, written by the Board of Commissioners’ lawyers, uses different language. It says: “WakeMed intends to convert from a non-member nonprofit, which has no defined owner or member, to a single-member nonprofit, a structure where Atrium Health becomes the sole member.”

This change ensures unified governance, consistent oversight, and alignment with system objectives. That is the actual deal.

The press release describes a partnership for the public; the agenda item is a conveyance for those holding the gavel on Monday.

The community is not the customer.
The community is the asset being conveyed.

The deals get made before the press release.
This is where you find out first.

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WHAT “SOLE CORPORATE MEMBER” ACTUALLY MEANS

A non-profit hospital has members. The members elect the board. The board hires the CEO. The CEO runs the institution. That chain of accountability is the core legal structure for every charitable hospital corporation in North Carolina.

WakeMed today is a “non-member” non-profit, meaning it is not owned by members or shareholders. No outside party controls the chain. The board governs itself and is accountable to the 1997 Wake County transfer agreement that created it.

Under the deal, Atrium Health becomes the sole corporate member. According to the agenda item, WakeMed “continues as the same legal entity without dissolving or reincorporating.” The hospital and legal entity remain, with no asset sale, purchase price, or transfer tax.

The chain of accountability changes.
That is all.

Atrium does not buy WakeMed. Instead, Atrium replaces the existing chain of accountability by becoming the sole corporate member, gaining full legal control.

That is why this is a ‘combination’, meaning a legal and governance integration, rather than a traditional merger. A merger triggers Hart-Scott-Rodino premerger antitrust review at the federal level. A merger triggers asset transfer analysis at the state level.

A merger requires the buyer to assume all of the target’s liabilities at closing.
None of that happens here.

What happens here is a paperwork conversion: WakeMed’s articles of incorporation get amended, its official corporate documents are changed. The single-member box gets checked, indicating Atrium as the single entity with legal control. Atrium is the name in the box.

That is the entire transaction.

Read more

In video two of the Fortress Balance Sheet series, I makes a simple argument: the renewal letter is not a quote. It’s a tax. The carrier isn’t pricing your risk. They’re pricing the largest number they believe you will tolerate without leaving.

The fix is two moves. First, self-fund the plan, the way Walmart, Boeing, Google, Amazon, and the hospital system that bought your competitor’s practice already do. Second, layer a captive insurance company on top of the self-funded plan. The captive holds the stop loss. The captive owns the underwriting margin. Every dollar that used to be carrier profit lands on a balance sheet you own.

I’ll talk you through the math at three scales:

• 25 doctors ($2.5M annual benefits spend): roughly $30M of owned capital by year 20.

• 250 doctors ($25 to $30M annual spend): $300 to $400M by year 20.

• 25,000 doctors ($2.5 to $3B annual spend): one of the largest insurance balance sheets in the United States, owned by the physicians who generated the premium.

I try and answer the obvious objection (what about a bad year?), explains why physician groups specifically have not made this move (broker incentives, not intelligence), and closes with the clause buried in your fully insured contract that 99.9% of physicians don’t know about: a 30 to 45 day cancellation provision. You don’t have to wait for October.

Watch the full video below.

-Rojas out.

A nonprofit hospital is tax-exempt.
You knew that.

A state hospital is something different.
It is the state.

University of Missouri Health Care does not file a Form 990.
There is nothing to file. The state does not pay taxes to itself.

And now it wants legal permission to acquire 25 counties of rural hospitals without antitrust review.

Essential Context: The State of Missouri is represented by two of the most influential lawmakers in the naiton. Congressman Jason Smith, Chairman of Ways and Means substantial and Senator Josh Hawley who sits on Senate HELP. Both of these committee assignments have direct oversight on American Healthcare policy.

IN TODAY’S ARTICLE:

• Why Section 115 of the Internal Revenue Code makes The University of Missour Health a different kind of tax-exempt than the one you are thinking of

• With every acquisition the system makes, it converts taxable property into state property, permanently.

• The math of $122 million in claimed “community benefit” against $62.5 million in actual charity care

• Why the antitrust immunity bill is the closing argument, not the opening

Glossary at the bottom of today’s article.

THE STATE DOES NOT PAY TAXES TO ITSELF

Most readers know what a 501(c)(3) hospital is. A nonprofit. A tax-exempt corporation organized under federal law. Files a Form 990 every year. Has to publish executive compensation. Has to claim community benefit to keep the exemption.

University of Missouri Health is none of those things.

It is not a 501(c)(3). It does not file a Form 990. It does not have to defend its exemption every year because there is no exemption to defend. The University of Missouri Health is a state instrument, organized as part of the University of Missouri System, governed under Section 115 of the Internal Revenue Code.

Section 115 excludes income derived by a state from the exercise of essential governmental functions from gross income. The state does not pay federal income tax to itself.

That is the starting position.

Every other tax exemption flows from there. No federal income tax. No Missouri state income tax. Zero property tax on the entire portfolio: the 390-bed flagship University Hospital, the Women’s and Children’s Hospital, Ellis Fischel Cancer Center, Missouri Orthopaedic Institute, Missouri Psychiatric Center, and dozens of clinics across mid-Missouri.

Boone County collects nothing from any of it.

THE TAX CANNIBAL

Here is one reason you read The Rojas Report.

Every facility the University of Missour Health acquires becomes part of the state. On the day the deal closes, that facility ceases to be a taxable asset.
Forever.

In 2024, the system fully integrated Capital Region Medical Center in Jefferson City. Capital Region was a separate nonprofit before the integration. Now it is state property. Cole County and the City of Jefferson City no longer assess it the same way.

This is not a one-time event. Capital Region was the largest of a sequence. The University of Missouri Health has opened owned clinics and urgent care locations in Audrain County and in Mexico, Missouri. Each one of those is state property the day it opens. None of them generates property tax for the counties they sit in.

The pattern is the cannibal. Every time The University of Missiouri Health grows, the local tax base shrinks.

Every hospital The University of Missouri swallows leaves the tax rolls forever. 60,000+ physicians and healthcare operators track acquisitions on this newsletter because the announcement comes after the deal is closed. By then, the rolls have already shifted.

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THE NUMBERS THE STATE DOES NOT PUBLISH

Now look at the scale of what is already inside the moat.

In Fiscal Year 2025, The University of Missouri Health reported $1.91 billion in total operating revenue. That is up from $1.77 billion in FY2024 and $1.41 billion in FY2023. The University of Missouri System has budgeted $2.12 billion in net revenues for FY2026. Every dollar of that flows through an entity that does not pay federal income tax, does not pay Missouri income tax, and does not pay property tax.

Total assets at the end of FY2025: $1.97 billion. Total net position: $1.22 billion. Operating income for the year: $68.4 million. Net position grew by $107 million over the past 12 months.

A university health system with $1.22 billion in net worth that adds $107 million a year is not a struggling safety net. It is a corporation. The phrase “safety net hospital” is a tax classification, not a financial diagnosis.

$918,465

The CEO of the University of Missiour Health is Ric Ransom. He took the job in May 2023, replacing interim CEO Nim Chinniah, who replaced Jonathan Curtright. Ransom holds a JD, an MBA, and an MSHA. He came from the University of Wisconsin Hospitals system and, before that, ran operations at Greenville Memorial Hospital in South Carolina.

In 2024, his annual salary was $918,465.

That figure is on the public payroll. Ransom is a state employee. There is nothing hidden about it. It is just not reported.

In FY2025, total compensation and benefits across the entire system reached $789 million. The system spent $62.5 million on charity care that year. The compensation line is roughly 12.6 times the charity line.

This is not corruption. There is no scandal. The state is paying market rate for an academic medical center CEO. The point is what the structure produces. A state instrumentality, exempt from every meaningful tax, that pays Wall Street wages while writing off 3.2% of revenue to the poor.

A state employee earning $918,465 is not a secret. It is just not reported. The Rojas Report names the salaries that other publications round down.

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THE COMMUNITY BENEFIT MATH

Hospital community benefit is the line item that justifies tax exemption. It is supposed to mean charity care. In practice, it almost never does.

The University of Health publishes a page called “Our 340B Story.” On that page, the system claims $122 million in “charity care, in-kind health services, volunteer time, and health education training” for FY2023.

Read that sentence again.

Charity care, in-kind, volunteer time, and education training.
Those are four different things in one number.

The University of Missouri System’s own Budget Facts FY2026 reports actual charity care for FY2025 at $62.5 million. Even adjusting for the year difference, the implication is clear. About half of what the system markets as community benefit consists of volunteer hours, education credits, and in-kind padding that cost the system little to nothing.

The $62.5 million in actual charity care is 3.2% of FY2025 revenue.
The padded $122 million figure makes it look like 6.4%.

That is the entire community benefit industry. Not just here. Everywhere. The Lown Institute audits hospital fair-share spending nationwide and finds the same gap at most tax-exempt systems.

340B AS PROFIT CENTER

The 340B Drug Pricing Program is supposed to help safety-net hospitals stretch federal resources. Hospitals get steeply discounted drug pricing, then dispense those drugs to insured patients at full reimbursement. The spread is the savings.

In FY2023, The University of Missouri Health booked $132 million in 340B savings. That is the system’s own number, on the system’s own page.

We just started a new series on 340B. Start here.

Federal law does not require 340B hospitals to pass any of those savings to patients at the pharmacy counter. Most do not. The Minnesota Department of Health published the only state-level 340B transparency report in the country, finding that Minnesota’s 340B hospitals took in $1.34 billion in net 340B revenue in 2024. The 12% largest covered entities captured more than 80% of that total. Hospitals’ 340B profits ran more than three times their uncompensated care spending.

There is no equivalent disclosure requirement in Missouri.
There is no public reporting of how much The University of Missouri Health’s $132 million in 340B savings reaches uninsured patients vs. how much funds general operations.

THE HIDDEN BILLION

Beyond tax exemptions and 340B, The University of Missouri Health is a primary beneficiary of three Medicaid supplemental payment streams that almost no patient ever sees on a bill.

Disproportionate Share Hospital payments. Graduate Medical Education payments. Upper Payment Limit payments. These are state-administered, federally-matched programs that flow directly to hospitals serving Medicaid populations or operating teaching programs.

In FY2023, Missouri distributed $558.1 million in Medicaid DSH payments and $520.3 million in non-DSH supplemental payments (which includes UPL and GME) statewide. That is over $1 billion in supplemental Medicaid funding flowing to Missouri hospitals every year, on top of the standard Medicaid claims reimbursement they already receive.

UPL is restricted to government-owned hospitals. The University of Missouri Health is one of a small number of Missouri institutions eligible to receive it. The federal-state structure makes it a targeted subsidy for state-owned systems.

State of Missouri Rep. Jeff Knight and Sen. Kurtis Gregory filed the antitrust immunity bills in February. Most independent physicians in mid-Missouri learned of it from a guest commentary in April.

The deal gets made before the press release.
This newsletter is where you find out first.

Join us! The Rojas Report

THE BILL

In February 2026, Rep. Jeff Knight, R-Lebanon, filed HB 3170. Sen. Kurtis Gregory, R-Marshall, filed the companion bill, SB 1602. Both bills do the same thing. Both grants the University of Missouri Health antitrust immunity to acquire any “hospital, medical or other health care facility” across a 25-county region in central Missouri.

The 25 counties are Adair, Audrain, Boone, Callaway, Camden, Chariton, Cole, Cooper, Gasconade, Howard, Linn, Macon, Maries, Miller, Moniteau, Monroe, Montgomery, Morgan, Osage, Pettis, Phelps, Pike, Pulaski, Randolph, and Saline.

Ric Ransom personally testified in support before the Senate General Laws Committee. “As you look at choice, access, cost increases, the reasons that have nothing to do with a legislative monopoly, there’s less choice in central Missouri,” Ransom told the committee.

He is the CEO of a $1.9 billion state-owned hospital system, arguing before state senators that the way to address limited choice is to grant him legal immunity from antitrust review while he buys out the competition.

Kim Schlemeier, testifying in opposition, said the bill is more narrowly tailored than the 25-county frame suggests. “I believe that the legislation exempting them from antitrust is somewhat more narrowly tailored to Cole and Boone County, with the other 23 counties somewhat as window dressing.”

Boone is where The University of Missouri Health’s flagship University Hospital sits. Cole is where Capital Region Medical Center, recently absorbed, sits. Those are the two counties where The University of Missouri Health actually competes today. The other 23 counties are the stretch goal.

The closing line from opposition testimony lands as a direct hit on independent practice. “If this bill passes, specifically with its provisions for antitrust immunity, surgery centers in mid-Missouri would become entirely dependent upon the goodwill of a single entity, The University of Missouri Health, to keep their doors open.”

EVERY COUNTY THEY TOUCH PAYS TWICE

This is the closing argument and the reason this article exists.

Every hospital and independent medical practice that The University of Missouri Health acquires under HB 3170 or SB 1602 leaves the property tax rolls in the county where it sits. Permanently. The day after closing, that facility is state property. Boone County, Cole County, and every rural county named in the bill watches its assessable hospital tax base disappear, one acquisition at a time.

That tax base does not just vanish. It shifts. Every county budget has to be made whole. The shortfall comes out of every other property in the county: every farm, every house, every small business, every commercial parcel that is not state-owned. The bigger The University of Missouri gets, the heavier the property tax bill on every Missourian.

Why isn’t anyone calling this a tax bill?
It is a tax bill.

The bill was sold to legislators as the rescue plan for a rural hospital crisis. Sen. Gregory cited 20 hospital closures in Missouri over the past decade, ten of them rural. The Center for Healthcare Quality and Payment Reform reports that 50% of Missouri’s 58 remaining rural hospitals are at risk of closure, with 21% at immediate risk.

There is a rural hospital crisis.
The crisis is real.
That crisis is also solveable today without taxpayer help.

The bill is not a rescue.
It is a privatization of the cascade.
It transfers private hospital assets into a state instrumentality, removes them from local tax rolls, and shields the acquirer from antitrust review.

The diagnosis is clear:
Missouri’s rural hospitals are dying.
They are all fixable today.

The prognosis is what the lawmakers can talk the people of Missouri into next.

Independent physicians in 25 Missouri counties are about to compete against an antitrust-immune state monopoly.
No one in Jefferson City is coming to save them.

They are saving each other on this list. 100,000+ physicians and operators.
One signal.

Read The Rojas Report

WHAT COMES NEXT FOR INDEPENDENT PRACTICE IN MID-MISSOURI

The 23 counties Schlemeier called “window dressing” are not actually window dressing. They are the option set. Every rural hospital in those counties that hits financial distress in the next 24 months is a potential acquisition target under the new framework. The bill does not just authorize specific deals. It builds the legal infrastructure for any future deal.

For independent surgery centers in Boone, Cole, Callaway, and Cooper counties, the practical effect of antitrust immunity is the removal of the only legal restraint that currently keeps payor contracting and physician hiring in something resembling balance. A monopoly with state-actor immunity has no antitrust ceiling. It has whatever the state legislature lets it have.

There is a captive insurance answer to part of this problem. There is a payor-contracting-aggregation answer to part of it. Neither of those answers exists anywhere in Missouri yet. They will. The question is whether the people who need them know they are coming before the next acquisition closes.

-Rojas out.

GLOSSARY

Section 115 IRC: Federal tax code provision that excludes from federal income tax any income a state derives from essential governmental functions. State universities and their hospital systems use it as the basis for federal tax exemption. Different from Section 501(c)(3), which governs nonprofits and requires Form 990 disclosure.

State instrumentality: A government entity operated by or as part of a state. The University of Missouri Health operates as part of the University of Missouri System and is treated as part of the state itself for tax purposes.

340B Drug Pricing Program: Federal program that requires drug manufacturers to provide discounted prices to “covered entities,” meaning hospitals serving disproportionate-share Medicaid populations and certain rural facilities. Hospitals dispense the discounted drugs at full reimbursement and book the spread as savings or revenue.

DSH (Disproportionate Share Hospital): Medicaid supplemental payments to hospitals that serve a disproportionate share of Medicaid and uninsured patients.

GME (Graduate Medical Education): Medicaid supplemental payments that subsidize hospital teaching programs, meaning residencies and fellowships.

UPL (Upper Payment Limit): Medicaid payments that bridge the gap between base Medicaid rates and what Medicare would have paid for the same services. Available primarily to government-owned hospitals.

Antitrust immunity: A legislative or regulatory exemption from antitrust enforcement. HB 3170 and SB 1602 grant MU Health Care immunity from federal and state antitrust laws for acquisitions in 25 counties.

Certificate of Need (CON): A state regulatory regime requiring healthcare providers to obtain government approval before opening new facilities, adding beds, or purchasing major equipment. Missouri maintains active CON laws.

Form 990: The annual return filed by 501(c)(3) tax-exempt organizations, including most nonprofit hospitals. Public document. Discloses revenue, executive compensation, and major contracts. State instrumentalities are not required to file it.

SOURCES

[1] Internal Revenue Code §115; University of Missouri System, “Notes to Financial Statements,” FY2025 Financial Report.

[2] University of Missouri Health Care, “Locations,” muhealth.org/about-us/locations.

[3] COMO Business Times, “Growing Healthcare into the Future,” January 2024.

[4] COMO Business Times, “Growing Healthcare into the Future,” January 2024 (Audrain County and Mexico clinic openings).

[5] University of Missouri System, “FY2025 Financial Report,” October 2025. [VERIFY: pull umsystem.edu PDF for exact FY2025 line items.]

[6] University of Missouri System, “Budget Facts FY 2026,” January 2026. [VERIFY: pull from umsystem.edu.]

[7] Show Me Mizzou, “University of Missouri Announces Ric Ransom as CEO of MU Health Care,” February 2023; Yahoo News, “Ric Ransom to lead University of Missouri Health Care,” February 2023.

[8] Public payroll records, 2024. [VERIFY: confirm exact figure via St. Louis Post-Dispatch Public Pay database (graphics.stltoday.com/apps/payrolls/salaries_2025/117) or Missouri Accountability Portal (mapyourtaxes.mo.gov).]

[9] University of Missouri Health Care, “Our 340B Story,” muhealth.org/about-us/340b.

[10] Lown Institute, “Hospital Fair Share Spending,” 2024 reports.

[11] Minnesota Department of Health, 340B Transparency Report, 2024 data published February 2026; STAT News, “Minnesota report shows large hospitals continue to dominate the 340B drug discount program,” February 2026.

[12] MACPAC, “Exhibit 24: Medicaid Supplemental Payments to Hospital Providers by State, FY 2023,” December 2024.

[13] Webster County Citizen, “Senate bill would allow MU Health Care to expand ownership in rural areas,” February 2026; KBIA, “Bill could broaden MU Health Care’s reach in rural counties,” February 20, 2026; Columbia Missourian, “Unprecedented legislation would allow MU Health Care to circumvent antitrust rules,” guest commentary; Missouri Independent, “Missouri’s rural hospital bill grants antitrust immunity without oversight,” April 6, 2026.

[14] Center for Healthcare Quality and Payment Reform, rural hospital closure risk analysis, cited in Missouri Independent, April 6, 2026.

In 1992, Congress wrote a paragraph to keep HIV clinics and rural hospitals alive. By 2024, that paragraph was moving $81 billion a year.

In December 2025, a federal judge in Maine froze the reform plan, and 40+ pharmaceutical manufacturers, 20+ state legislatures, the Trump White House, the American Hospital Association, and your community hospital are now in open conflict over who controls the money next.

There is a federal drug pricing program in this country that moves more money than the entire National Institutes of Health budget. Most physicians have never read its statute. Most lawmakers cannot explain how it works. Most patients have no idea their hospital is participating in it.

It is called 340B.

In 2024, it hit $81 billion in drug purchases. 40+ pharmaceutical manufacturers are in open revolt against it. 20+ state legislatures have passed laws to defend it. The Trump administration wants to move it to a different agency. A federal judge in Maine just froze the centerpiece of the reform plan.

And the fight has barely started.

IN TODAY’S ARTICLE

• A 340-character paragraph in a 1992 veterans health bill became an $81 billion shadow drug economy. The statute does not require any of the savings to reach the patient. Read that sentence twice.

• The 10x growth curve. 340B drug purchases jumped from roughly $8 billion in 2016 to $81 billion in 2024 at the ceiling price equivalent, the metric HRSA uses. Industry trackers estimate the list-price-equivalent total at more than $124 billion in 2023. Congress never voted to expand either number.

• The four players you need to know to follow every 340B headline: pharmaceutical manufacturers, covered entities, contract pharmacies, and HRSA. Three of them are at war with each other. The fourth has issued exactly one binding regulation in three decades.

• The four-phase escalation. From the 2022 contract pharmacy crackdown by AbbVie, Sanofi, Eli Lilly, and Genentech, to the December 2025 Maine ruling that stopped HRSA’s rebate pilot cold.

• The next move by HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz determines whether 340B remains in its current form, is rebuilt as a rebate, or is folded into Medicare entirely.

Glossary at the bottom of today’s article.

THE 1992 ORIGIN STORY

There is an $81 billion economy built on a paragraph almost nobody has read. That paragraph is Section 340B of the Public Health Service Act, passed in 1992.

It was tucked into the Veterans Health Care Act, signed by George H.W. Bush, and almost nobody noticed. The deal was simple. If a pharmaceutical manufacturer wanted Medicaid to cover its drugs, it also had to offer those drugs at steep discounts to a defined list of “covered entities.” That list was narrow. HIV clinics under the Ryan White program. Federally Qualified Health Centers. Disproportionate Share Hospitals serving large numbers of Medicaid and low-income Medicare patients. Tuberculosis clinics. Family planning clinics.

The rural hospital categories most readers associate with 340B today were not in the 1992 statute. Critical Access Hospitals. Sole Community Hospitals. Rural Referral Centers. Free-standing cancer hospitals. Congress added all of them 18 years later, in the Affordable Care Act of 2010. That single expansion is one of the structural reasons the program reached $81 billion.

The logic was straightforward. Safety-net institutions were drowning in the cost of outpatient drugs. Congress wanted to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Those are the actual words from the original legislative report.

Now read what is missing from that sentence.

There is no mandate that the savings get passed to the patient.
There is no mandate requiring the savings to be returned to the program that generated them.

There is no requirement that the entity be non-profit.
There is no cap on what a hospital can do with the money.
There is no public reporting requirement on how the savings get spent.

That is the quiet part out loud. The federal program designed to subsidize care for low-income patients does not require the subsidy to reach those patients. Read that sentence again. The federal program designed to subsidize care for low-income patients does not require the subsidy to reach those patients.

That gap is what built the $81 billion economy.

This is not a story about a drug discount. This is a story about the most leveraged subsidy in American healthcare, owned by whoever learned to access it first.

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HOW THE DISCOUNT WORKS

The mechanic is simple.
The economics are not.

A drug manufacturer sets a list price. Call it $1,000 per vial. Under 340B, the manufacturer is required to offer that drug to a covered entity at a “ceiling price” calculated by a federal formula. The formula is based on the Medicaid Best Price and the Average Manufacturer Price, with an inflation adjustment. The ceiling price is often a fraction of the list price. Sometimes it is literally one cent. That is called “penny pricing,” and it triggers when a manufacturer raises a drug’s price faster than inflation.

The covered entity buys the drug at the ceiling price. Then it dispenses the drug to its patients. The covered entity bills the patient’s insurance, including Medicare and commercial insurance, at the patient’s full negotiated rate. The spread between what the entity paid and what insurance reimburses is the 340B margin.

That margin is the entire economic engine of the program.

For a Critical Access Hospital in rural Kentucky, that margin keeps the lights on. For an FQHC in inner-city Detroit, that margin pays for case managers and dental clinics. For a billion-dollar academic medical center in a wealthy suburb, that margin is a revenue line on the income statement.

The statute does not distinguish between those three. They are all “covered entities.”

If you have ever been billed at the full sticker price for a drug your hospital bought for one cent, you have just lived inside the 340B program.
You did not know it.
Now you do.

Is it appropriate for a billion-dollar academic medical center, with no statutory obligation to publicly report how it spends the money, to claim the same ceiling-price discount on a $15,000 cancer drug as a Critical Access Hospital that loses money on every patient it admits? Federal law says yes. Three decades of growth say nobody is checking.

THE FOUR PLAYERS

Every 340B headline you read involves four parties. Get them straight, and the news stops being confusing.

Pharmaceutical Manufacturers. The companies that make the drugs have to offer the discount. AbbVie. Sanofi. Eli Lilly. Genentech. Novartis. AstraZeneca. Johnson & Johnson. They are the ones writing the checks, and after a decade of program growth, they are the ones leading the counter-offensive. PhRMA is their trade association. PhRMA is also the entity that filed and lost the Supreme Court appeal of Arkansas’s contract pharmacy law.

Covered Entities. Hospitals, FQHCs, Ryan White HIV clinics, and other safety-net institutions are eligible to purchase drugs at the ceiling price. There are roughly 50,000 covered entity sites in the country, depending on how you count. The largest concentration is Disproportionate Share Hospitals, which account for the lion’s share of program spend. The American Hospital Association is the largest organized voice on the covered-entity side. America’s Essential Hospitals represents the most safety-net-dependent slice of the membership.

Contract Pharmacies. This is the player who detonated the program. In 1996, HRSA issued guidance allowing covered entities to contract with one outside pharmacy to dispense 340B drugs on their behalf. In 2010, HRSA expanded that guidance to allow unlimited contract pharmacy arrangements. The result is what you would expect. Walgreens, CVS, and Walmart became the largest 340B pharmacy networks in America. A rural hospital in West Virginia could now claim 340B savings on a prescription dispensed at a CVS in suburban Cleveland.

HRSA and the Office of Pharmacy Affairs. The Health Resources and Services Administration is the HHS agency that runs 340B. The Office of Pharmacy Affairs (OPA) is the HRSA unit responsible for enforcement. HRSA has issued exactly one binding regulation in the program’s three-decade history. Almost every operating rule comes from non-binding “guidance.” That fact will matter a lot by the time this article is over.

You did not know the names of any of these contract pharmacy operators 60 seconds ago. Now you do.

Everyone in healthcare has an opinion.
Very few have receipts.
This is where the receipts live.
Subscribe to The Rojas Report.

THE GROWTH CURVE

Here is the number that broke the program.

In 2016, a total of 340B drug purchases were roughly $8 billion. By 2024, they hit $81 billion. That is a 10x expansion in eight years. No federal healthcare program in modern memory has grown that fast without congressional action.

Year by year, ceiling-price equivalent purchases:

A note on the two numbers in circulation.
Readers will see both $81 billion and $124 billion attached to the 340B program. Both are real.
They measure different things.

The $81 billion figure is the program’s ceiling-price equivalent purchase total. It is the cash that actually moved through covered entities at 340B prices in 2024. This is the number HRSA and most industry analysts use when reporting “340B drug purchases.”

The $124 billion figure is the program’s WAC (wholesale acquisition cost). It estimates what those same purchases would have cost at full list price before the 340B discount was applied. Drug Channels Institute and Berkeley Research Group typically publish this number to illustrate the size of the discount itself rather than the cash that changed hands. Their most recent published WAC-equivalent figure for the program crossed $124 billion in 2023. [VERIFY: Drug Channels Institute and Berkeley Research Group source citations and most recent published figures]

Same program. Two metrics. The $124 billion answers “how much would these drugs have cost at full price?” The $81 billion answers “how much actually moved through the program?” The gap between them is the discount itself, which is the point of the program.

When this series quotes a 340B program-size number without qualification, the figure is ceiling-price equivalent. When the WAC-equivalent figure is the relevant frame, it is labeled.

Three forces drove that curve.

The first is contract pharmacy expansion. The 2010 HRSA guidance turned 340B from a hospital-pharmacy program into a national retail-pharmacy program. The number of contract pharmacy locations grew from a few thousand to tens of thousands.

The second is hospital consolidation. As health systems acquired physician practices and outpatient clinics, they extended 340B eligibility to every site under the parent’s TIN. A drug administered in a private oncology office became a 340B drug the day the practice was acquired.

The third is the cancer drug economy. Specialty oncology drugs went from rare to routine, and the per-vial margins on 340B oncology agents created seven-figure annual revenue lines for community cancer centers. Pharmaceutical manufacturers watched their fastest-growing product lines get repriced at fractions of the list price, and they stopped pretending the program was still about HIV clinics.

The system is not broken. It is working exactly as the 1992 statute permits, just not for the reason the 1992 statute was written.

THE FOUR-PHASE ESCALATION

The 2022-2026 timeline is the part nobody outside healthcare consulting can keep straight. Here is the spine.

Phase 1: The Contract Pharmacy Crackdown (2022-2024). Starting in 2020 and accelerating through 2024, more than 40 pharmaceutical manufacturers unilaterally restricted 340B pricing at contract pharmacies. AbbVie, Sanofi, Eli Lilly, Genentech, Novartis, and AstraZeneca led the charge.

The mechanism was simple. Manufacturers began demanding claim-level data via third-party platforms such as 340B ESP and Kalderos Truzo.

No data, no discount. The covered entities sued. HRSA issued violation letters.

The cases spread across federal circuits. A localized dispute escalated into an industry-wide embargo, fundamentally disrupting the traditional 340B supply chain.

Phase 2: The State Legislative Counter-Offensive (2024-2025). With Congress paralyzed, state legislatures stepped in. Arkansas went first, becoming the first state to enforce a contract pharmacy protection law. AstraZeneca was the first manufacturer it went after. Louisiana, Mississippi, Minnesota, Maryland, West Virginia, Nebraska, Kansas, Missouri, Colorado, Utah, Ohio, Oregon, North Dakota, Vermont, Maine, Rhode Island, Hawaii, and more followed.

The Supreme Court declined to hear PhRMA’s appeal of the Arkansas case. The Fifth Circuit upheld Louisiana’s law. The Eighth Circuit upheld Arkansas’s. Federal district court injunctions blocked enforcement in West Virginia and Oklahoma.

The result: 340B is no longer a unified federal program.
It is a 50-state mosaic of conflicting compliance mandates.

Phase 3: The Rebate Revolution (2025). In July 2025, AbbVie executives walked into the Office of Management and Budget and pitched a structural rewrite. Stop the upfront discount. Make covered entities pay the full list price. Force them to submit claim-level data through a clearinghouse. Pay them back as a rebate after the data clears. AbbVie called it a “program integrity measure.”

The American Hospital Association estimated the compliance cost for 340 B hospitals at over $400 million per year in September 2025 and revised that estimate to over $1 billion in April 2026. HRSA opened a Request for Information. More than 5,500 public comments came in.

Of the 5,500 comments, roughly 1,100 of them were identical, traced to a template circulated by Patients Rising, a pharma-funded patient advocacy group. The 340B Report exposed it.
Patients Rising shut the campaign down.

That is the quiet part out loud.
A trade association funded a patient-advocacy group to manufacture the appearance of grassroots support for a rule change that would transfer hundreds of millions of dollars in working capital from hospitals to manufacturers.

The advocacy stopped within days of the exposure.
The rule change did not.

Phase 4: The Maine Stay and the 2026 Realignment (December 2025-Present). On December 29, 2025, the U.S. District Court for the District of Maine issued a preliminary injunction halting HRSA’s rebate pilot. On January 7, 2026, the First Circuit denied the government’s request for a stay. On January 20, 2026, the government dropped its appeal. On February 5, 2026, HHS told the court it would scrap the current pilot. On February 17, 2026, HRSA opened a fresh Request for Information on the same model.

In April 2026, HHS Secretary Robert F. Kennedy Jr. testified before a Senate subcommittee that he was “unaware of the current status” of the rebate model and agreed to brief the Senate’s bipartisan “Gang of Six.”

The administration’s FY 2027 budget proposes integrating the Office of Pharmacy Affairs into CMS Program Management, placing CMS Administrator Mehmet Oz in charge of the rewrite.

That is where we are this morning.

WHY THIS MATTERS

If you are a physician, 340B is why your employer-hospital can afford to keep your oncology clinic open in a market where reimbursement does not cover the cost of chemotherapy. It is also the reason your employer-hospital can pay an executive an eight-figure salary who has never seen a patient. The 1992 statute does not distinguish between those two uses. Read that sentence again. The statute that lets your hospital subsidize your clinic is the same statute that lets your hospital subsidize the executive who closed the rural site down the road.

If you are a lawmaker, 340B is the program your constituents do not know they depend on, your state law may or may not protect, and your federal counterparts cannot agree on how to fix it. The federal courts have split. The Supreme Court declined to step in. The Fifth and Eighth Circuits upheld state laws. The Fourth and Tenth Circuits have not. Your district falls under one of those circuits. You probably do not know which one applies to your hospital. Your hospital does.

If you are a patient, 340B is invisible to you.

Your health benefits are still billed at full price.
Your copay is still your copay.
The discount happens in the back room, between the manufacturer and the hospital, and you never see the money.

Whether your hospital uses that money to subsidize your cancer care or to build a parking garage is a decision the statute does not require anyone to disclose.

That is the design problem.
That is the political problem.
That is the rest of the series.

WHAT BREAKS NEXT

The Maine ruling pauses the rebate model. It does not resolve it. AbbVie, Sanofi, Eli Lilly, and the rest are not done. Patients Rising is regrouping. The state laws are still being challenged. The IRA’s Maximum Fair Price program is colliding with 340B ceiling prices in Q1 2026, and ceiling prices for negotiated drugs are compressing fast. Penny pricing is disappearing.

Three forces decide what 340B looks like 18 months from now. The federal courts. The state legislatures. The CMS reorganization that turns Mehmet Oz into the program’s de facto administrator.

Is it appropriate for the federal agency that runs Medicare and Medicaid to also run an $81 billion drug discount program, with the same Administrator who is currently rewriting Medicare’s drug negotiation playbook, with no congressional vote, with no public comment period on the transfer itself, and with a budget proposal that has not yet been enacted? That is the question every covered entity in the country is asking this morning. It is not the question being answered.

This is the Primer. The 340B Files start in Part 1.

• Part 1: The Rebate Revolution. I walk through the AbbVie OMB pitch line by line. The names in the room. The legal theory. The American Hospital Association’s revised $1 billion compliance bill. And the part of the AbbVie framework signaled in the OMB deck itself: an “operational patient definition” that could narrow who qualifies for 340B pricing.

• Part 2: The AstroTurf Operation. How 1,100 identical comments from a pharma-funded patient group nearly hijacked the federal record. Who funds Patients Rising? Why did the campaign stop within days of exposure?

• Part 3: The Maine Stay and the State Counter-Offensive. The legal landscape after Loper Bright. The 50-state map. The two circuits that upheld state laws. The two that have not.

• Part 4: The IRA Collision. What happens when the Inflation Reduction Act’s negotiated prices land on top of 340B ceiling prices, and which hospitals do not survive the math?

You did not know any of this 20 minutes ago. Now you do.

-Rojas out.

GLOSSARY

340B Program: A federal drug pricing program created by Section 340B of the Public Health Service Act in 1992. Requires drug manufacturers participating in Medicaid to sell outpatient drugs at a ceiling price to qualified safety-net institutions called "covered entities." Hit $81 billion in drug purchases in 2024.

Average Manufacturer Price (AMP): The average price paid to a manufacturer by wholesalers for drugs distributed to retail pharmacies. One of the inputs to the 340B ceiling price formula.

Ceiling Price: The maximum price a manufacturer can charge a covered entity for a 340B-eligible drug. Calculated from AMP and Medicaid Best Price.

Ceiling-Price Equivalent: Metric used by HRSA and most industry analysts to report 340B program size. Measures the cash that actually moved through covered entities at 340B prices. Anchored at $81 billion in 2024.

CMS (Centers for Medicare & Medicaid Services): The HHS agency that runs Medicare and Medicaid. The FY 2027 budget proposal would move 340B oversight from HRSA to CMS, putting CMS Administrator Mehmet Oz in charge.

Contract Pharmacy: A retail pharmacy that dispenses 340B drugs on behalf of a covered entity under a contract. Walgreens, CVS, and Walmart operate the largest 340B contract pharmacy networks in the country. Authorized in 1996 HRSA guidance, expanded to unlimited arrangements in 2010 HRSA guidance.

Covered Entity: A safety-net healthcare institution eligible to participate in 340B. Original 1992 categories included Disproportionate Share Hospitals, Federally Qualified Health Centers, Ryan White HIV clinics, tuberculosis clinics, and family planning clinics. The Affordable Care Act of 2010 added Critical Access Hospitals, Sole Community Hospitals, Rural Referral Centers, and free-standing cancer hospitals. Roughly 50,000 sites nationally.

Disproportionate Share Hospital (DSH): A hospital serving a high percentage of low-income Medicaid and Medicare patients. The largest 340B covered-entity category by program spend.

Duplicate Discount: A statutorily prohibited situation where a manufacturer pays both a 340B discount and a Medicaid (or Medicare inflation, or Maximum Fair Price) rebate on the same drug claim. The core program-integrity argument advanced by manufacturers in favor of a rebate model.

Federally Qualified Health Center (FQHC): A community health center receiving HRSA funding to serve underserved populations. A core 340B covered-entity category.

HRSA (Health Resources and Services Administration): The HHS agency that currently administers 340B through its Office of Pharmacy Affairs. Has issued one binding regulation in the program’s three-decade history.

IRA (Inflation Reduction Act): 2022 federal law authorizing Medicare drug price negotiation, creating the Maximum Fair Price for covered drugs and an inflation rebate that affects 340B ceiling-price calculations.

Loper Bright Enterprises v. Raimondo: 2024 Supreme Court decision overturning Chevron v. NRDC. Eliminated the doctrine that courts defer to agency interpretations of ambiguous statutes. Cited as the legal backdrop for hospital challenges to HRSA’s rebate pilot.

Mehmet Oz: CMS Administrator under the second Trump administration. Confirmed along party lines. Would become the de facto administrator of 340B if the FY 2027 budget proposal moving the program from HRSA to CMS is enacted.

Maximum Fair Price (MFP): The Medicare-negotiated price for selected drugs under the IRA. First MFPs took effect January 1, 2026, on Eliquis, Jardiance, Imbruvica, Januvia, and other negotiated drugs. Overlaps with 340B ceiling prices on the same products.

Office of Management and Budget (OMB): The White House budget and regulatory review office. AbbVie executives pitched the rebate model framework here on July 1, 2025.

Office of Pharmacy Affairs (OPA): The unit inside HRSA responsible for 340B program enforcement.

Operational Patient Definition: Phrase from the AbbVie OMB deck signaling a structural narrowing of who qualifies as a 340B-eligible patient. The 340B statute does not define “patient.” HRSA’s 1996 guidance defined it broadly. The size of any cut implied by AbbVie’s framing is not clear from the public record.

Patients Rising: A patient advocacy group identified by the 340B Report as the source of duplicate-template comments submitted during HRSA’s 340B Rebate RFI process. Pharma-funded.

Penny Pricing: A 340B mechanism that drops the ceiling price of a drug to one cent when the manufacturer raises the drug’s price faster than inflation. Disappearing fast under IRA-era negotiated pricing.

PhRMA: Pharmaceutical Research and Manufacturers of America. The trade association representing the manufacturer side of the 340B fight. Filed and lost the Supreme Court appeal of Arkansas’s contract pharmacy law.

Rebate Model: The proposed structural rewrite of 340B in which covered entities pay full list price upfront and receive the discount as a post-purchase rebate after submitting claim-level data through a clearinghouse. Pitched by AbbVie at OMB on July 1, 2025. Halted by federal court in Maine on December 29, 2025. Reopened by HRSA RFI on February 17, 2026.

Request for Information (RFI): A formal federal process for collecting public input. HRSA’s 2025 340B Rebate RFI received more than 5,500 comments, roughly 1,100 of which were identical templates from Patients Rising.

Robert F. Kennedy Jr.: HHS Secretary under the second Trump administration. Testified before a Senate subcommittee in April 2026 that he was “unaware of the current status” of the rebate model and agreed to brief the bipartisan “Gang of Six” Senate working group.

Ryan White HIV/AIDS Program: Federal HIV/AIDS funding program. Ryan White clinics are 340B covered entities and were among the original intended beneficiaries of the 1992 statute.

Third Party Administrator (TPA): A vendor that manages 340B operations for a covered entity, including inventory tracking and split-billing software. 340B ESP and Kalderos Truzo are two of the platforms manufacturers have demanded data through.

WAC-Equivalent (Wholesale Acquisition Cost-Equivalent): Alternative metric for 340B program size used by industry trackers including Drug Channels Institute and Berkeley Research Group. Measures the list-price value of the same drug volume before the 340B discount was applied. Crossed $124 billion in 2023.

SOURCES

1. AbbVie, Inc. 340B Rebate Guidance OMB Briefing Deck. Filed in connection with the July 1, 2025 OIRA meeting under RIN 0906-ZA14. Includes the phrases “manufacturers lack timely claim-level data to prevent duplicate discounts and ensure compliance,” “A rebate model is a straightforward solution,” and the reference to “implement an operational patient definition.”

2. 340B Report. “AHA Urges HRSA to Delay 340B Rebate Pilot, Argues Hospitals Face at Least $400M in Annual Costs.” September 2025.

3. American Hospital Association. Letter to HRSA on the 340B Rebate Model. September 30, 2025. Cites per-hospital compliance costs of $150,000 to over $500,000, a conservative aggregate above $400 million, and the “interest-free loans” framing.

4. American Hospital Association. April 2026 court filing. Revised compliance estimate above $1 billion annually; UC Health estimate of approximately $120 million in additional drug acquisition costs (~$10 million per month) for 2025 pilot drugs.

5. 340B Report. “HRSA Proposes 340B Rebate Model Pilot for Narrow Set of Drugs Under Strict Conditions.” July 2025.

6. Federal Register. Pilot notice describing the 340B Rebate Model Pilot Program. August 7, 2025.

7. 340B Report. “Maine Federal Judge Halts 340B Rebate Pilot Nationwide.” December 2025.

8. 340B Report. “1st Circuit Declines HHS’ Bid to Immediately Pause Order Blocking 340B Rebate Pilot, But Signals Plans for Quick Ruling.” December 2025.

9. 340B Report. “1st Circuit Grants HHS’ Motion to Voluntarily Dismiss 340B Rebate Pilot Appeal.” January 2026.

10. 340B Report. “HHS Formally Withdraws 340B Rebate Pilot, Agrees to New Guardrails for Any Future Rebate Efforts.” February 2026.

11. 340B Report. “HRSA Releases Request for Information Seeking Comments on Whether to Move Forward with 340B Rebate Pilot.” February 2026.

12. 340B Report. “Trump’s FY 27 HHS Budget Again Looks to Move 340B from HRSA to CMS, Calls for Major OPA Funding Increase.” April 2026.

13. 340B Report. April 21, 2026. Coverage of HHS Secretary Robert F. Kennedy Jr. Senate subcommittee testimony stating he was “unaware of the current status” of the 340B rebate model.

14. Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). For 340B impact analysis see 340B Report, “The Demise of Chevron Deference: What Does It Mean for the 340B Program?” November 2024.

15. Health Resources and Services Administration. 1996 Patient Definition Guidance. Federal Register.

16. Association of American Medical Colleges. 2024 statement on legislative proposals to define “patient” in 340B statute.

LEGAL DISCLAIMER

This report is based entirely on publicly available federal records, court filings, and legislative materials, supplemented by an industry strategic briefing reviewed by The Rojas Report. It identifies structural patterns and anomalies in the 340B drug pricing program. No allegation of fraud, wrongdoing, or criminal activity is made against any individual or entity. All conclusions are limited to what the data supports, and limitations are stated explicitly.

Methodology note: 340B drug purchase totals are reported as ceiling-price equivalent purchases per HRSA and industry tracker convention, anchored at $81 billion in 2024. Alternative methodologies (WAC-equivalent, list-price-equivalent) measure the notional value of the underlying drugs at full price and have placed the program above $124 billion in 2023. Both figures are real. They measure different things, as explained in “The Growth Curve” section.

Becker’s framed it as a race.
The chains framed it as consolidation.
Wall Street framed it as a roll-up.

Every framing has the same payoff.
Physicians sell.
PE compounds.

There is a structure where physicians compound.

IN TODAY’S ARTICLE:

• Why selling at 12x EBITDA is losing, not winning.

• What PE is actually buying. And why physicians keep mispricing it.

• The three captives: casualty (with med mal), property (the ASC itself), and health benefits.

• The Up-C endgame: liquidity without governance surrender.

Glossary at the bottom of today’s article.

THE FRAMING IS THE TRAP

Becker’s calls it a land grab. The trade press counts doors. USPI sits at 533 centers. SCA sits above 370. AmSurg, combined with Ascension, is above 300 and adding. HCA holds more than 150. Surgery Partners owns 157 after rejecting Bain’s $3.2 billion offer. Tenet has allocated $250 million a year to keep buying.

Independents still own roughly 70 percent of the market.

There is no race.
Private equity pays 8 to 12 times EBITDA to bring centers onto their platforms.
Once inside, the same EBITDA compounds at 14-18 times.
Physicians sell at a lower multiple.
The chain keeps the higher returns for years.

That is not winning.
That is forfeiting the compounding before it starts.

WHAT PRIVATE EQUITY IS ACTUALLY BUYING

The building is not the asset. The procedure mix is not the asset. The asset is the long tail underneath: the float on workers’ comp premiums, the float on medical malpractice premiums, the float on self-funded health benefits at an aggregated scale, the rebates on implants that currently route through group purchasing organizations as fees, and the recurring procedure volume booked against fixed real estate.

PE understands this. That is why they pay. The center collects what the payor contract permits. The captive structure beneath the center compounds quietly remains for 30 years. The center is the entry point. The captive is the prize.

Physicians keep selling the entry point and forfeiting the prize.

THE INVERSION

The third structure is built on the inversion of the PE trade.

Private equity offers infrastructure parity in exchange for ownership. The third structure offers infrastructure parity in exchange for participation. The center stays physician-owned. The captive economics route for physicians, rather than leaking to Hartford or Travelers. The float compounds for the people doing the cutting, not for the people writing the check.

That is the entire pitch.
Everything below this line is the architecture that makes it operational.

ANESTHESIA IS THE WEDGE

On October 1, UnitedHealthcare cut CRNA reimbursement by 15 percent when billed with the QZ modifier. That cut sits atop two years of stipend inflation and a documented anesthesia shortage. For an independent ASC, this is a structural emergency. For USPI and SCA, it is a marginal annoyance absorbed across 500-plus locations and a national staffing chassis.

A pooled anesthesia structure fixes this differently than a chain acquisition does. Anesthesiologists and CRNAs employed through a single-employer chassis with coordinated benefits and pooled medical malpractice coverage routed through a physician-owned captive. The independent ASC accesses a chain-equivalent anesthesia infrastructure without selling the building.

USPI and SCA cannot match this defensively. They need to extract margin from the anesthesia line because their LPs require it. The captive needs to retain margin because the surplus belongs to the surgeons.

That is the asymmetry. The chain is structurally constrained to bleed anesthesia. The captive is structurally constrained to protect it.

Private equity buys ASCs because they understand what the asset actually is.
Most physicians selling them don’t.
The Rojas Report explains the language difference that makes the trade obvious. 100,000 physicians and healthcare operators read it before the press release.
Subscribe.

Read more

Doctors believe political donations are unseemly.
Hospitals believe political donations are insurance.

That is why one side has a federal lobbying machine.
The other side has a fee schedule that gets cut every year.

Kevin Hern starts this Senate race with seven million dollars.

The hospital lobby has spent fifty years building the donor pipeline around every committee that touches Medicare. Physicians have built a habit of complaining at conferences.

One of these strategies compounds.
The other gets reimbursed at a lower conversion factor.

THE PROBLEM IS NOT WHAT YOU THINK IT IS

Independent medicine has been losing structural policy fights for thirty years.

The standard explanation is that hospitals have better lobbyists, lawyers, narratives, or connections.

That is not the explanation.

The explanation is simpler. One side made an investment. The other side made a moral statement.

The investment compounded.

The moral statement was cut from the conversion factor every year.

Pull the 2024 federal lobbying disclosures. The American Hospital Association spent $29 million. The Federation of American Hospitals spent $2.4 million. Hospitals and health systems combined spent $116 million.

Independent physician trade groups have no comparable line item. Not “smaller.” Not “less coordinated.” None.

That is the entire architecture in one paragraph.

When the Medicare conversion factor gets cut, hospitals already had eight people in the room arguing for the carve-outs that protect hospital outpatient department reimbursement. Independent physicians had a press release. The carve-outs are written into the rule. The press release is read by other physicians.

This is not a story about who is right. The Avalere data is overwhelming. Independent practices cost Medicare less per beneficiary, drive fewer inpatient days, and generate fewer emergency department visits than hospital-affiliated practices. Researchers published the data. No one contests it. The data did not change the rule.

They didn’t outcompete. They out-lobbied.

You have been complaining about outcomes without funding the inputs that support them.

You can learn how committee math actually works.
Or you can keep being surprised when it works against you.
Subscribe to The Rojas Report at read.rojasreport.com.

THE MECHANISM

Senate Finance has jurisdiction over Medicare, Medicaid, and federal tax policy. CMS writes the annual rule administratively, but Congress sets the conversion factor in statute, and Senate Finance writes the statute. Every meaningful change to physician payment in the last decade ran through that committee.

Site-of-service rules. 340B reform, or the refusal of it. Medicare Advantage payment rates. Alternative payment models. The conversion factor itself.

Hospital donors funded every member of that committee. Pull the FEC reports. AHA is in there. FAH is in there. AAMC is in there. Every regional system in their state is in there.

Pull the FEC reports for independent physicians.
You will not find a comparable line item.

This asymmetry grew over fifty years of consistent hospital donations and physician abstention. One side invested.

Between 2027 and 2030, the same committee will rewrite the conversion factor. It will rewrite site-neutral payment policy. It will rule on the next round of Medicare Advantage reform.

If the donor mix on that committee in 2030 is similar to what it was in 2020, it is likely the rule will remain as it has. Same inputs. Same outputs.

The math problem is not whether physicians’ arguments are correct.

The question is whether physician perspectives are presented to a committee willing to consider them.

THE LIVE TEST CASE

Kevin Hern announced his Senate run on March 11, 2026. He is replacing Markwayne Mullin, who left the Senate to serve as the Department of Homeland Security’s acting secretary.

Hern is in his fourth term in the U.S. House. He sits on Ways and Means. He chaired the Republican Study Committee. He now chairs the Republican Policy Committee.

Before any of that, he ran a McDonald’s franchise group. Eighteen restaurants in the Tulsa metro. He sold the last one in 2021.

That biography matters more than it sounds.

Most senators have never signed a payroll check. Most senators have never priced a menu against a CPI shock. Most senators have never explained to an employee why their hours got cut because the franchisor changed the contract.

Physicians have done all three. You sign payroll. You absorb conversion factor cuts. You explain to staff why bonuses are smaller this year because a payer denied another batch of clean claims.

Hern is one of a handful of senators who would walk into Senate Finance with that scar tissue.

He starts the race with seven million dollars in cash. His senior advisor is Tony Fabrizio, the lead pollster for President Trump’s 2016 and 2024 campaigns. His early endorsements include Senators Bill Hagerty, Ron Johnson, Rick Scott, and Jim Banks.

The hospital lobby has already noticed.

THE RECEIPT

Hern’s most-cited healthcare bill is the CHOICE Act.

He introduced it. He passed it through Ways and Means on a 25-18 vote on June 7, 2023. The House passed it 220-209 on June 21, 2023.

The bill expanded individual coverage of Health Reimbursement Arrangements. It lets employers fund employees’ own coverage decisions instead of locking them into a corporate-managed plan. The Biden administration opposed it. Hern called the opposition “a badge of honor.”

The receipt that matters more for this election is older and quieter.

Hern is an original co-sponsor of H.R. 4002, the Patient Access to Higher Quality Health Care Act of 2025, introduced by Reps. Beth Van Duyne (R-TX) and Henry Cuellar (D-TX). The bill repeals Sections 6001 and 10601 of the Affordable Care Act, the provisions that froze new physician-owned hospitals out of Medicare in 2010 and capped existing facilities at their March 2010 bed and operating room counts.

His statement on introduction:

“We need innovation and competition in the healthcare space, and physician-owned hospitals often have high rates of patient satisfaction. Doctors spend the most time with patients; they ought to have the opportunity to own and operate their own hospitals. Let’s remove the barriers for those who are providing the actual care.”

He is also an original co-sponsor of H.R. 2191, the Physician-Led and Rural Access to Quality Care Act, introduced by Rep. Morgan Griffith (R-VA), which permits physician ownership of rural hospitals more than 35 miles from a main patient campus.

He signed on to the same vehicle as far back as the 116th Congress, when it was H.R. 3062 in 2019.

The receipts cover four congresses with three sponsors.
The commitment was consistent.

That matters in a Senate where most members have never met an independent physician.

The hospital lobby is counting on you not paying attention.
One hundred thousand physicians and healthcare operators refuse to comply. Read this newsletter at read.rojasreport.com.

THE LOBBY HE WILL HAVE TO BEAT

Three names defend the status quo.

Rick Pollack, American Hospital Association president. He has run AHA since 2015. He announced in December 2025 that he will retire by the end of 2026, but he is fully engaged through the transition, which means he is fully engaged through this election. AHA’s $29 million in 2024 federal lobbying does not include state association coordination, which adds further millions across the cycle. His job is to protect the hospital outpatient department reimbursement premium that lets a hospital collect 2.5 times the Medicare payment a physician’s office gets for the same service.

Charlene MacDonald, Federation of American Hospitals president and CEO since January 1, 2026. She replaced Chip Kahn, who retired after twenty-four years running FAH. Kahn is the legislative architect of Section 6001 of the ACA, the provision that froze the physician-owned hospital industry in 2010. MacDonald inherits that legacy and the budget that defends it.

David Skorton, Association of American Medical Colleges president and CEO since 2019. AAMC defends the academic medical center subsidy structure: graduate medical education funding, deep 340B participation across member teaching hospitals, and disproportionate share hospital payments. AMCs operate on a federal subsidy stack that community physicians cannot access. AAMC’s job is to keep that stack intact.

Three offices.
Three legislative agendas.
And every one of them has a budget that funds at least eight people whose only job is to remind senators which way to vote on physician payment.

You have the moral high ground.
They have a federal lobbying budget.

THE MATH

The federal individual contribution limit for the 2025-2026 cycle is $3,500 per election. A primary plus a general contribution combined is $7,000 maximum per individual. Couples giving jointly may contribute up to $14,000 combined for the cycle.

Now the cost of inaction.

Avalere studied how Medicare expenditures change when an independent physician transitions to a hospital-affiliated model. The study, commissioned by the American Independent Medical Practice Association in September 2024, analyzed five specialties: cardiology, gastroenterology, medical oncology, orthopedics, and urology.

Per beneficiary per year, when a physician moved from independent to hospital affiliation, total Medicare expenditures went up by a weighted average of $1,327. When they moved to a corporate affiliation, expenditures increased by $1,140.

Apply that to your panel. A physician treating 1,500 Medicare beneficiaries in an independent practice represents $1,327 multiplied by 1,500 in additional Medicare spending the moment that practice gets absorbed by a hospital system.

Two million dollars per practice. Per year. Permanent.
That is the consolidation cost.

Now, the related fight runs through the same committee. Site-neutral payment.

The Congressional Budget Office estimates that aligning Medicare payments for outpatient services commonly delivered in physician offices, hospital outpatient departments, and independent physician offices would save Medicare $157 billion over 10 years.

Site-neutral payment is the cleanest single committee fight in healthcare.

The Senate Finance Committee will run that fight between 2027 and 2030.

Hern starts his race with seven million dollars in cash. The hospital industry spent $116 million on federal lobbying in 2024 alone. The math against this seat is not a question of capability.

The math problem is not whether he can win. The math problem is whether independent medicine shows up before the primary deadline or after the loss.

The deals get cut before the press release.
Subscribe to Read.rojasreport.com and find out first.

THE REAL TAKEAWAY

This article is not really about Congressman Kevin Hern running for Senate.

Hern is the test case.

The article is about the thirty-year pattern that produced the fee schedule you currently work under. Hospitals treated federal political giving as a permanent operating expense. Physicians treated it as an occasional emotional reaction after another policy loss.

That is the entire difference.

Independent medicine does not need a single hero. It needs to learn that the hospital lobby is not winning because hospital arguments are better.

It is winning because hospital giving is permanent, disciplined, and structural, and physician giving is sporadic, reactive, and undercapitalized.

If physicians treated political giving the way hospitals do, the conversion factor would not look the way it does. The site-of-service rules would not look the way they look. Congress would have repealed Section 6001 years ago.

Hern is one Senate seat. One open committee assignment. One cheap entry point in a 2026 cycle that will not be cheaper in 2028, 2030, or 2032.

The deeper move is to stop treating federal political giving as something you do when you are angry, and start treating it as a line item on your overhead.

The hospital lobby figured this out in 1975.
You have a deadline.

THE ASK

This is the first federal candidate The Rojas Report has explicitly underwritten.
Not a recommendation.
A position.

Kevin Hern for U.S. Senate.

Donation page: Kevin Hern Support Page

Federal individual limits: $3,500 primary, $3,500 general, $7,000 combined maximum per individual. Couples giving jointly may contribute up to $14,000 for the cycle.

Editorial endorsement. Not coordinated with the campaign or any affiliated political committee. Sourced and reported independently.

Stop mistaking political abstinence for professional virtue.

The other side never did.

-Rojas out.

GLOSSARY

Senate Finance Committee: The U.S. Senate committee with jurisdiction over Medicare, Medicaid, federal tax policy, and federal health programs. Congress sets the Medicare conversion factor in statute through this committee. The single most consequential committee for physician income.

Medicare Physician Fee Schedule (MPFS): The annual federal rule that sets payment rates for physician services in Medicare. Updated each year through a “conversion factor” adjustment. CMS writes the rule administratively under statutory authority Congress shapes.

Ways and Means Committee: The U.S. House counterpart to Senate Finance. Has jurisdiction over Medicare and federal tax policy in the House. Hern’s current committee.

Section 6001 of the Affordable Care Act: The 2010 ACA provision that effectively banned new physician-owned hospitals from participating in Medicare and capped existing facilities at their 2010 bed and operating room counts.

H.R. 4002 (Patient Access to Higher Quality Health Care Act of 2025): The current vehicle to repeal Sections 6001 and 10601 of the ACA. Lead sponsors are Reps. Beth Van Duyne (R-TX) and Henry Cuellar (D-TX). Hern is an original co-sponsor.

H.R. 2191 (Physician-Led and Rural Access to Quality Care Act): A narrower vehicle that allows physician-owned hospitals more than 35 miles from a main patient campus or critical-access hospital. Hern is an original co-sponsor.

CHOICE Arrangement Act (H.R. 3799): Hern’s 2023 bill expanding individual coverage Health Reimbursement Arrangements. Passed the House 220-209 on June 21, 2023.

Site-of-Service / Site-Neutral Payment: Federal payment policy that produces different reimbursement rates for the same service depending on whether it is delivered in a hospital outpatient department, an ambulatory surgery center, or an independent physician office. Hospital outpatient rates are systematically higher.

340B: A federal drug pricing program created in 1992 to allow safety-net hospitals and clinics to purchase outpatient drugs at deeply discounted prices. Has expanded far beyond its original safety-net intent.

Avalere / AIMPA Study: The September 2024 whitepaper, “Medicare Service Use and Expenditures Across Physician Practice Affiliation Models,” commissioned by the American Independent Medical Practice Association. The current authoritative source on what happens to Medicare expenditures when independent physicians get absorbed into hospital and corporate models.

LDA (Lobbying Disclosure Act of 1995): The federal law requiring quarterly disclosure of lobbying activity. Source for all federal lobbying expenditure figures cited in this article.

SOURCES

1. The Hill, “Kevin Hern launches Senate bid for Markwayne Mullin’s Oklahoma seat,” March 11, 2026.

2. Tulsa Today, “Kevin Hern Announces for U.S. Senate,” March 11, 2026.

3. Oklahoma Voice, “Hern launches bid for US Senate, will not seek another term in House,” March 11, 2026.

4. Congress.gov, H.R. 3799, 118th Congress, CHOICE Arrangement Act.

5. House Ways and Means Committee, H.R. 3799 one-pager and Committee Report 118-107.

6. Hern.house.gov, “Hern bill passes Ways and Means Committee,” June 7, 2023.

7. Van Duyne press release, “Van Duyne Leads Bipartisan Legislation to Expand Patient Access to High Quality Health Care,” June 24, 2025.

8. AMA, “Bill introduced to allow physician-owned hospitals in rural areas,” May 29, 2025.

9. Hern.house.gov, “Rep. Hern signs on to bill allowing expansion of physician-owned hospitals,” March 9, 2020.

10. Avalere Health and AIMPA, “Medicare Service Use and Expenditures Across Physician Practice Affiliation Models,” September 2024.

11. OpenSecrets, “American Hospital Assn Lobbying Profile.” Source for AHA federal lobbying spend of $29,017,803 in 2024.

12. Taylor et al., “Patterns of Federal Lobbying by the Hospital Industry,” JAMA Health Forum, 2025.

13. Bipartisan Policy Center, “Site Neutrality in Medicare Payment,” updated December 2025.

14. KFF, “Five Things to Know About Medicare Site-Neutral Payment Reforms,” August 2025.

15. AHA press release, “American Hospital Association President and CEO Rick Pollack Announces Retirement,” December 10, 2025.

16. FAH press release, “After Nearly a Quarter Century of Leadership, Chip Kahn to Retire from the Federation of American Hospitals,” June 6, 2025.

17. Chief Healthcare Executive, “Federation of American Hospitals names new CEO with policy expertise.”

18. AAMC, “David J. Skorton, MD” leadership biography.

19. Federal Election Commission, “Contribution limits for 2025-2026,” published January 30, 2025.

You can answer that.
Most physicians can answer it to the dollar.

Now answer this one: how much does your practice keep?

Twenty years of work.
Millions in collections.
A balance sheet that looks the same as it did in year three.

That’s the problem this series solves.

Most physicians can tell you their practice’s revenue to the dollar. Almost no one can tell you what landed on the balance sheet. For most independent practices, the answer is nothing, twenty years of work, millions in collections, and a balance sheet that looks the same as it did in year three.

Enterprises such as manufacturers and commercial real estate owners figured this out forty years ago: same dollars, different classification.

Expenses become assets.
Distributions become retained capital.

The dollars stay, compound, and build something that survives the day you stop working. That is the only difference between a health system and an independent practice.

This series is the translation. We will send videos, articles, research papers, and more to teach you how to build an integrated balance sheet and the tools to compete with any health system in the country.

The Series

Each video stands on its own. Watch them in order if you want the full picture. Watch them out of order if a specific topic matches where you are.

Video 1: What Your Practice Keeps (this one)
Video 2: The Health Benefits Captive
Video 3: The Casualty Captive
Video 4: The Professional Liability Captive
Video 5: Direct-to-Employer Contracting
Video 6: Building Your Own Network
Video 7: Forward Pricing on Medical Treatments.

Subscribe to The Rojas Report and you’ll get each video the day it drops. The math at the end of the series is the integrated balance sheet, all seven items stacked. One balance sheet that lets independent practices stay independent.

[Subscribe →]

Twelve principles. One broadcast. Forty-five years.

In one hour on Phil Donahue in March 1980, Milton Friedman named every regulatory capture mechanism the American hospital industry would spend the next four and a half decades weaponizing.

The broadcast is public record. The playbook is open. The prosecution starts below.

IN TODAY’S ARTICLE:

• Twelve regulatory capture principles from one 1980 broadcast, each with a healthcare receipt

• The $6 billion pharmaceutical-to-advocacy funding flow that launders industry lobbying as patient advocacy

• The 22-percent airline fare reduction that proves deregulation broadens ownership instead of narrowing it

• The 88%/12% dependency structure that explains every dollar the AHA spends keeping physicians employed, distracted, and atomized

Glossary at the bottom of today’s article.

A note on what follows…

That afternoon’s featured book was Free to Choose. Adam Smith sat on the cover. The audience was suburban housewives in Chicago.

Milton Friedman did not say the word “healthcare” once in the entire hour.

He described, in complete detail, the regulatory mechanisms the American Hospital Association, the Federation of American Hospitals, and the American Medical Association spent the next 45 years weaponizing into the most extractive medical-industrial complex in human history.

The Interstate Commerce Commission as a template for regulatory capture. Incumbents writing their own rules. Subsidies disguised as public protection. “Affecting to trade for the public good” while the public pays the bill.

The hospital industry watched the broadcast and recognized a playbook.

The physicians watched the broadcast and heard an economics lecture.

Only one of those groups was paying attention.

What follows are twelve principles Friedman articulated that afternoon, and the receipts for what each one became in American medicine by 2026.

1. “Affecting to trade for the public good” is the entire hospital lobbying script.

Friedman quoted Adam Smith on air: nobody lobbies Congress saying “pay me a bonanza.” They lobby saying the public will be harmed if you do not.

Every piece of hospital industry testimony before Ways and Means, Energy and Commerce. Senate HELP, and Finance follows this template exactly.

340B expansion testimony claims safety-net protection. The receipt shows that 340B hospitals collect commercial spreads on drugs dispensed to insured patients in wealthier zip codes than the hospitals’ own patient catchment areas.

Site-neutral opposition claims rural hospital protection. Rural hospital closures accelerated through the decade the AHA blocked site-neutral. The regulatory moat did not save rural hospitals. It protected urban HOPD margins.

CON law claims prevention of wasteful duplication. CON states have fewer ASCs per capita, higher hospital prices, and worse access to outpatient care than states that repealed.

The public-good frame is the sales pitch. The receipt is the tax return.

Rep. Greg Murphy (R-NC), a physician, sits on the Ways and Means Health Subcommittee. In the 2024 cycle, he accepted $68,000 from the Hospitals & Nursing Homes sector alone, including $12,500 from the Federation of American Hospitals PAC, while voting on Medicare physician payment rates. The committee that sets physicians’ earnings is funded by the entities that benefit when physicians earn less.

Smith described this in 1776. Friedman described it in 1980. The AHA executed it in 2026.

2. The ICC is the Rosetta Stone for healthcare regulation.

Friedman spent eight minutes on the Interstate Commerce Commission. The structure he described:

Reformers in the 1880s built the ICC to stop railroad monopoly abuse. The railroads captured the ICC within a decade. By the 1930s, the ICC existed primarily to block trucking competition on behalf of railroads. By 1980, a federal agency administered a trucking cartel.

The do-gooders moved on to the next cause. The incumbents took over the agency that was meant to restrain them. The public paid.

Healthcare runs four parallel versions.

340B (1992): Created to support safety-net hospitals serving poor patients. Over time, DSH hospitals and contract pharmacies took over the program. It now functions as a commercial-patient arbitrage generating billions in profit for major health systems with no requirement to serve the patients it was built for.

Certificate of Need (1974): The law aimed to prevent costly duplication. Incumbent hospitals took over approvals. Now, it acts as a legal veto over hospitals, ASCs, imaging centers, and independent practices competing with hospital outpatient departments.

MedPAC: The commission was built to advise Congress on Medicare payment. Hospital-affiliated appointees now dominate. As a result, reports understate hospital margins and overstate physician payment adequacy.

The RUC: Formed to value physician work. Now, specialty society appointees dominate. They set values favoring procedural and hospital-based practices.

Friedman described the mechanism. Four regulatory bodies demonstrate it.

Read more

IN TODAY’S ARTICLE

• CMS just asked whether Section 1115A can crack the door Section 6001 closed fifteen years ago.

• Three of the eight RFI questions decide whether the opening is real or decorative.

• BCBSA already wrote the frame that would exclude surgical-specialty physician-owned hospitals. AHA and FAH file next.

• Comments close 5 p.m. EDT on June 9, 2026. Silence is a position.

Glossary at the bottom of today’s article.

Fifteen years ago, the American Hospital Association and the Federation of American Hospitals sold Congress a story. Physician-owned hospitals were cherry-picking patients. Specialty facilities were cream-skimming DRGs. Physician entrepreneurship was threatening the community safety net. The cartel’s lobbying arms spent 2010 writing their competition out of the Medicare program and stitched the result into Section 6001 of the Affordable Care Act.

It worked. Section 6001 froze new physician-owned hospitals out of Medicare participation. The law capped existing facilities at their 2010 bed counts and operating room counts. The physicians who still wanted to own their own facilities watched fifteen years of their careers pass while the same hospital systems that lobbied for the ban spent those years acquiring physician practices, closing rural facilities, and jacking up commercial prices across every market they dominated.

That’s the deal the cartel got from Congress in 2010. On Friday, April 10, 2026, CMS displayed a proposed rule that asks whether the deal gets rewritten.

What CMS actually did

CMS displayed CMS-1849-P, the FY2027 Inpatient Prospective Payment System proposed rule, on April 10, 2026. The Federal Register published it on April 14. Inside the section on the Transforming Episode Accountability Model, CMS included a Request for Information with eight questions. The questions ask whether CMS’s Innovation Center should allow physician-owned hospitals to voluntarily opt into TEAM, and whether Section 1115A demonstration authority should waive specific provisions of Section 6001(a)(3) to make that opt-in operational.

Congress enacted both Section 1115A and Section 6001 as part of the Affordable Care Act in 2010. Same law. Section 6001 closed the door on physician hospital ownership. Section 1115A granted the CMS Innovation Center authority to waive Medicare statute for demonstration models. Fifteen years later, CMS is asking whether Section 1115A can reach Section 6001(a)(3). The same statute that closed the door is being asked whether it can crack the door open.

The statutory expansion-exception process under Section 6001 is narrow. It has not produced broad reopening. Repeated legislative efforts to loosen or repeal the restrictions have not produced broad reopening either. Three bills currently sit in the 119th Congress. H.R. 4002 would repeal Section 6001 entirely. H.R. 2191 and S. 1390 would create a rural carve-out. An eighty-eight organization coalition including physicians, payers, and patients supports the rural bill. None has moved.

This RFI is different. It places an administrative opening on the public record. Comments close at 5 p.m. EDT on June 9, 2026. The final rule is expected in August.

TEAM itself is a five-year mandatory bundled payment model that started January 1, 2026. It covers five surgical procedures. Coronary artery bypass graft. Lower extremity joint replacement. Major bowel procedure. Surgical hip and femur fracture treatment. Spinal fusion. According to Physician-Led Healthcare for America, approximately fifteen physician-owned hospitals are already mandated into TEAM because CMS selected their Core-Based Statistical Areas for the model. The RFI is about whether to open voluntary opt-in to physician-owned hospitals in CBSAs that were not selected.

The door cracked. The cartel is already writing the frame that would narrow what gets through it.

Question 1: How wide does the door open?

CMS asks whether to allow a voluntary opt-in period, and whether participation should be limited to physician-owned hospitals grandfathered under the ACA to use the rural provider or whole hospital exception to the physician self-referral law.

This is door width.
It controls everything downstream.

Grandfathered-only limits opt-in to physician-owned hospitals that existed and participated in Medicare before December 31, 2010. That’s the narrow path. It treats the RFI as a payment model adjustment for the existing grandfathered class. No new entrants. No expansion of physician hospital ownership beyond what survived the ban.

The broader path treats the RFI as what it actually is. A question about whether Innovation Center demonstration authority creates Medicare participation opportunities for physician-owned hospitals that did not exist or could not participate in 2010. That opens TEAM to new entrants. It creates a pathway where none has existed for fifteen years.

Watch what AHA and FAH file on this. They’ll argue Section 6001 was Congressional intent. They’ll argue CMMI lacks authority to undo Congressional intent through demonstration models. They’ll ask CMS to limit opt-in to grandfathered hospitals only. That restriction renders the RFI essentially symbolic. A payment model tweak for the existing class and nothing else.

The physician-led position is that Section 1115A is explicit, broad, and designed exactly for questions like this. Testing whether physician-owned hospitals deliver bundled episode care at lower cost and equal or better quality requires physician-owned hospitals in the test. Limiting opt-in to grandfathered facilities limits the test to a pre-selected population already operating under structural constraints that non-grandfathered physician-owned hospitals do not face. The comment docket needs sustained pressure arguing the opt-in must be available to any physician-owned hospital meeting programmatic requirements, grandfathered or otherwise.

Question 2: Who qualifies geographically?

CMS asks whether opt-in physician-owned hospitals need to meet the same geographic eligibility criteria as other TEAM participants under 42 CFR 512.515, and whether additional inclusion criteria should apply.

The geographic question looks procedural. It is not.

If the opt-in is geographically limited to CBSAs where TEAM already operates, the addition is trivial. Those markets already contain the approximately fifteen mandated physician-owned hospitals PHA identified. If the opt-in extends to physician-owned hospitals in any CBSA, the model grows meaningfully and the test produces more useful data.

The additional inclusion criteria language is where the cartel hides exclusions inside safeguards. Watch for proposals to exclude physician-owned hospitals with case volume below a minimum threshold, with specialty concentration above a threshold, or outside specific urbanicity bands. Each exclusion narrows the opening without appearing to oppose it directly. The cartel counts on complexity to hide in plain sight.

The physician-led position is that geographic eligibility matches TEAM’s existing criteria without additional restriction. Inclusion criteria focus on quality metrics and participation capacity, not structural characteristics that exclude legitimate facilities from competition.

Question 3: Which waivers actually get granted?

CMS asks what programmatic waivers are necessary for physician-owned hospital participation. Expansion restrictions. Service limitations. The agency asks commenters to justify each waiver and explain how it will not undermine the model by allowing Medicare payment for services where payment is not currently allowed.

This is the operational question. It determines whether the opening is real or decorative.

Section 6001(a)(3) contains multiple operational constraints. The bed count cap. The operating room cap. The procedure room cap. The expansion request process through the Secretary. The ownership percentage freeze. The disclosure requirements. CMS is asking which of these to waive.

A narrow waiver list produces a hollow opening. Waive only the procedural requirement to request expansion through the Secretary, retain the bed count cap and the operating room cap, and the opt-in facility cannot actually scale operations to take on additional TEAM episodes. The hospital holds a theoretical right to participate and a practical impossibility to do so.

A meaningful waiver list addresses the operational constraints that actually prevent physician-owned hospital growth. Bed counts. Operating rooms. Procedure rooms. Service line restrictions. The expansion approval process. Every provision must be named specifically in comments, with justification showing why participation in TEAM cannot succeed without the waiver.

The trap in Question 3 is the burden of proof. CMS asks commenters to justify each waiver against the concern of allowing Medicare payment for services Section 6001 otherwise disallows. That framing treats every waiver as a deviation from baseline Congressional intent. The physician-led response flips the framing. Section 1115A exists precisely to test payment authorities that statutory default prohibits. The entire purpose of Innovation Center demonstration authority is to waive provisions to determine whether alternative structures produce better outcomes. The burden of proof belongs on the model design, not the waiver requests.

Context for Question 3 arrived eleven months before CMS filed the rule.

On May 27, 2025, the Blue Cross Blue Shield Association submitted a twenty-six page comment letter to the Department of Justice Antitrust Division’s Anticompetitive Regulations Task Force, Docket ATR-2025-0001. Anshu Choudhri, BCBSA’s Vice President of Policy Development, signed the letter. A payer that contracts with 96 percent of American hospitals and covers one in three Americans put itself on the federal record asking for exceptions to the Section 6001 ban.

Recommendation #5 of that letter cites Social Security Act §1877, the statute Section 6001 amended. It asks Congress to consider exceptions to restrictions on physician-owned hospitals when the goal is to improve competition and patient choice.

That’s the pressure signal. The payer that cracked the door is real. The payer also proposed the terms. BCBSA recommended carve-outs for community and general physician-owned hospitals. Rural and underserved areas. Highly concentrated markets. The letter explicitly excluded surgical-specialty physician-owned hospitals from its proposed exceptions. BCBSA’s stated concern, verbatim from the letter: “There is a concern that the latter type of POH could target patients and services with higher cost diagnosis-related groups (DRGs) with more favorable margins. This could leave non-POHs with the liability to provide access to emergency room, maternity and other services with lower margin DRGs.”

That’s the cream-skimming argument. It’s the same argument AHA and FAH used to sell Section 6001 to Congress in 2010. The 2023 Physicians Advocacy Institute and Physicians Foundation study analyzed approximately 740,000 Medicare discharges across 186 physician-owned hospitals and found patient age, race, ethnicity, and comorbid conditions virtually identical between physician-owned and traditional hospitals in the same geographic areas. The cream-skimming claim has been studied. It has not held up to the data.

The vocabulary also appeared in BCBSA’s May 2025 letter, but CMS had already used similar language in earlier physician-owned-hospital rulemaking. Beneficiary steering. Cherry-picking. Lemon-dropping. Three words the cartel has carried inside federal rulemaking for years. BCBSA reinforced the frame. CMS had already been operating inside it.

Surgical-specialty physician-owned hospitals are the operational core of physician hospital ownership in America. Orthopedic, spine, cardiac, and general surgery specialty facilities are what physicians can build without acute-care infrastructure and systems-scale capital. They’re also the category BCBSA explicitly excluded from its proposed exceptions. If the final rule adopts BCBSA’s framing on specialty facilities, the opt-in becomes a narrow pathway for community hospitals in rural areas. The specialty facilities where the majority of physician hospital ownership actually operates stay exactly where Section 6001 left them in 2010. Frozen. Waiting to be acquired by the systems that lobbied for the ban.

The comment docket addresses this directly or the opening closes.

What physicians do before June 9

The comment docket is not the battlefield.
The silence of physicians who own and operate these hospitals is.

Lobbyists will file. AHA will file. FAH will file. BCBSA will file, in more polished form than its May 2025 DOJ letter. PHA will file on behalf of the coalition. The AMA will file. Every trade association in healthcare will produce a comment letter, and most of those letters will cancel each other out.

What has not happened is the physicians themselves speaking on the public record in volume. Not their trade associations. Not their lobbyists. Them.

Every surgeon who operates in a physician-owned hospital. Every physician who wanted to build one and was stopped by Section 6001. Every clinician who watched a colleague’s practice get absorbed by the health system that lobbied for the ban fifteen years ago. All of them have what the cartel’s lawyers do not. Names. Faces. Operating rooms. Patients. Fifteen years of direct experience with what the ban did to American medicine.

Here’s what to do.

Record a sixty-second video. Say who you are, where you practice, why Section 6001 has constrained your ability to build the hospital your patients deserve, and what you want CMS to do. Post it to X, LinkedIn, and Instagram. Tag @CMSinnovates and @HHSGov. Use #PhysicianLedCare and #Section6001.

Submit a comment at regulations.gov. Reference file code CMS-1849-P. Do it before 5 p.m. EDT on June 9, 2026. The comment does not have to be long. It has to be on the record. Eight questions. Your answer to any of them, in your own language, from your own experience, carries more weight than another lobbyist memo.

The last fifteen years of physician hospital ownership were decided by the people who filed comments.

The next fifteen get decided the same way.
Not filing is filing.

Subscribe

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It does not.

It prevents independent physicians from operating integrated clinical delivery models. Hospital-employed physicians face no such constraint. The law does not ban self-referral. It bans self-referral by the wrong kind of physician.

IN TODAY’S ARTICLE:

• How Stark Law criminalizes physician ownership of ancillary services while exempting hospital employment

• The specific statutory language (42 USC 1395nn(a)(1) and (e)(2)) that creates a two-tier referral system

• Why the lowest-friction path to integrated care runs through a hospital W-2

• Thirty years of practice acquisitions walked on this conveyor belt

Glossary at the bottom of today’s article.

The Law That Built the Conveyor Belt

In 1989, Congress passed the physician self-referral prohibition, codified at 42 USC 1395nn and named after its primary sponsor, Representative Pete Stark. The stated purpose was straightforward: stop physicians from referring Medicare patients to entities in which the physician or an immediate family member holds a financial interest.

Fair enough on its face.

The logic went like this. A physician who owns a share of an MRI center has a financial incentive to refer patients to that center, regardless of medical necessity. Congress looked at that incentive and called it a problem.

So Congress built a wall.

Stark I, enacted in the Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239, Section 6204), applied the self-referral prohibition to clinical laboratory services. One service line. One prohibition. A targeted intervention.

Then came Stark II.

Four years later, the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66, Section 13562) expanded the prohibition to the full list of designated health services as defined at 42 USC 1395nn(h)(6). That list is not short.

Diagnostic imaging. Physical therapy. Occupational therapy. Outpatient prescription drugs. Durable medical equipment. Radiation therapy. Parenteral and enteral nutrients. Prosthetics, orthotics, and supplies. Home health services. Inpatient and outpatient hospital services.

The entire clinical ancillary stack.

After 1993, a physician with a financial interest in any entity providing any of those services could not refer a Medicare patient to that entity. Period. Unless a statutory or regulatory exception applied.

Congress did not build a guardrail. Congress built a cage. And then Congress handed the key to one class of physician while locking another class inside.

More physicians read The Rojas Report than their hospital system’s internal newsletter. There’s a reason for that. Subscribe.

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One number.

The carrier calculates it.
The carrier submits it.
The carrier does not have to show their work.

Every out-of-network arbitration in America starts with that number.

Four federal courts have now ruled it was calculated illegally.
Regardless, physicians win 80 to 88 percent of IDR cases.
At 2.5 to 4.5 times the QPA.

That’s not a win rate. That’s a verdict on the number itself.

IN TODAY’S ARTICLE:

• The QPA: how insurers calculate a number they never have to explain

• Ghost rates: the AMA found 57% of primary care physicians had services they never perform included in their network contracts. The raw material for rate manipulation.

• Four district court rulings called the QPA unlawful. The Fifth Circuit split the difference. The full court is still deciding.

• Why physicians win 80-88% of IDR cases at 3-4x the QPA. And why that gap is the story.

Glossary at the bottom of today’s article.

WHAT THE QPA IS

The No Surprises Act created an arbitration process for out-of-network billing disputes.

Before arbitration begins, each side submits an offer.

The arbitrator picks one.

To guide that choice, the law required a benchmark rate. A reference point the arbitrator could use to evaluate which offer was reasonable.

Congress called it the Qualifying Payment Amount.

The insurer runs the calculation. No external audit. No real-time verification. No requirement to show the underlying rate pool.

The ASPE/HHS/RAND stakeholder report documented what physicians discovered when they tried to examine QPA calculations: “Hey, show me your QPA calculations. They’re like, No, it’s all proprietary, but trust us, this is correct.”

Trust us, this is correct.
That was the benchmark.

GHOST RATES

The QPA’s accuracy depends on the quality of the contracted rates that go into the calculation.

The AMA surveyed primary care physicians and found that 57% had services they never perform included in their network contracts.

Read that again.

More than half of primary care respondents were contracted for services that fall outside their scope of practice.

Those rates exist on paper. They count toward the median calculation. They suppress the QPA for the services physicians actually perform.

The industry term is “ghost rates.”

Contracted rates for procedures no one in the network will ever bill. Included in the rate pool. Pulling the median down.

This is not a simple accounting error.

A rate that drags the median toward zero has to come from somewhere.
It was placed there.

The QPA is a number the insurer calculates and refuses to explain.
100,000+ physicians decided they'd rather know how it works than keep being surprised by its cost.

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Federal law requires it.

The same law that forces treatment controls payment.

It promises 30 days.

It delivers 150.

IN TODAY’S ARTICLE:

• How the No Surprises Act created a legal obligation to treat and a bureaucratic obstacle to payment

• The volume problem: 489,000 disputes in the first 14 months alone

• Why insurers’ own QPA calculation anchors arbitration outcomes downward

• Who benefits from 150-day payment delays, and how the math works

Glossary at the bottom of today’s article.

THE SETUP

December 27, 2020. Congress passed the No Surprises Act.

The deal was simple.
Patients would no longer receive unexpected bills from out-of-network physicians. When an insurer and a physician disagreed on payment, they would submit to federal arbitration. An independent arbitrator would decide.
The process would take 30 days.

Congress projected 22,000 disputes a year.

In the 14 months between April 2022 and June 2023, 489,000 disputes.

By 2024: 1.46 million.

By 2025, CMS put it in writing. Annual volume now exceeds 100 times the original projection.

The deal was simple. The numbers behind it were not.

TEXAS TOLD THEM

Before the No Surprises Act passed, two states had already built surprise-billing dispute-resolution systems: New York and Texas.

New York’s law used an independent nonprofit database called FAIR Health as the payment benchmark. It anchored insurer payments at a fixed percentage of the usual and customary rate. Emergency billing disputes in New York’s system collapsed. Not reduced. Collapsed.

Texas used arbitration, like the federal model. In 2020, the first full year Texas law was in effect, the Texas Department of Insurance received 44,910 arbitration requests and 3,855 mediation requests. Total: 48,765 dispute resolution requests. For a state where the law covered about 20% of Texans, per the Texas Department of Insurance’s own report.

The federal departments building the IDR projections had access to Texas data.

They used New York.

The data used to predict the scale were available. It was not used.

Why? The CMS methodology divided New York’s 2018 insured population of 12.3 million by the national commercially insured population of 183 million. They calculated that New York represented 5.7% of the country. They took New York’s approximately 1,000 annual resolved IDR disputes and extrapolated: the federal system would see roughly 17,435 disputes per year.

Texas, covering 20% of Texans and producing nearly 50,000 disputes in its first year, would have projected several hundred thousand annual federal disputes. Possibly over a million.

The GAO later found that four industry groups told them the departments failed to account for the experience of states with similar processes when making the estimate.

The GAO found that the federal departments underestimated dispute volume by a factor of 14 in the first year alone. By 2024, the actual-to-projected ratio exceeded 100.

WHAT 30 DAYS ACTUALLY MEANS

The statute is clear. The IDR process resolves within 30 business days of initiation.

The GAO examined what actually happened.

Average resolution time: 150 days.

Longest documented delay: 268 days.

The 30-day mandatory negotiation period between the insurer and the physician occurs before the IDR process even begins. Add the wait before arbitration even starts. A physician who treats an emergency patient and cannot agree on payment with the insurer may wait for resolution for the better part of a year.

The physician delivered the care. The patient received the care. The bill was submitted. The dispute was filed.

And then: nothing, for months.

Texas handed the government a warning.
The U.S. government used different data.
Someone made that choice.
100,000+ physicians are reading the receipts.
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There is a technique in advocacy journalism called Selective Illumination. Shine bright light on real numbers.
Leave the mechanism in the dark.
The audience concludes that the frame was built to produce.

The Wall Street Journal published a detailed examination of why American healthcare costs so much.

The data is real.
The sources are credible.
The charts are accurate.

And the picture it constructs is incomplete in ways that are not accidental.
This is an examination of Selective Illumination.

Shine a bright light on certain numbers. Leave others in the dark. The audience sees what you show them and draws the conclusions the frame was built to produce.

Here is what the article got right, what it omitted, and why the omissions matter more than the data.

WSJ: Why the US Spends So Much on Healthcare

What They Got Right

The consolidation map is accurate. According to the Health Care Affordability Lab at Yale, 21% of American hospitals now operate as monopolies in their markets. Another 30% operate in markets with higher concentration. That is not a functioning market. That is a protected oligopoly.

Administrative costs at 25% of total spend are sourced from a 2019 McKinsey and confirmed by David Cutler at Harvard. It is real. Billing complexity, claims processing, and prior authorization infrastructure are genuine cost drivers.

The inpatient procedure cost comparisons are real. A total hip replacement costs $29,000 in the United States versus $10,000 at peer nation. That gap is structural and documented.

The article is accurate about what it shows. The problem is what it chose not to show, and one critical thing it buried in a footnote, in text so small that most readers will never read it.

The Drug Pricing Section Contains A Devastating Admission Hidden In Fine Print

The drug price comparisons are striking. Herceptin costs $6,819 in the United States versus $1,360 in the UK. Enbrel at $6,238 versus $1,043 in Germany. Eliquis at $513 versus $96 in Spain.

These are list prices. And below the chart, in small footnote text, the article acknowledges: “Does not include all rebates.”

That footnote is the most important sentence in the entire piece.

Pharmacy Benefit Managers, Express Scripts, CVS Caremark, OptumRx, negotiate rebates from pharmaceutical manufacturers. Those rebates can represent 30-50% of the list price on branded medications. The spread between what the manufacturer receives and what appears on the chart is where billions in annual extraction occur.

The article correctly identifies that Americans pay more for drugs. It attributes this entirely to the government's negotiating posture; other governments force lower rates, the US government doesn’t. That is partially correct. What it does not mention: PBMs capture manufacturer rebates that do not consistently flow to patients at the pharmacy counter or reduce insurance premiums. They flow to the PBM.

The Journal acknowledged that the rebates exist. In a footnote. Then, they built an entire analytical section as if the footnote didn’t matter.

That is not an oversight. That is a choice about what the reader is meant to conclude.

This investigation is funded by physicians who decided the truth was worth paying for. Not a subscription. A decision. Join them at read.rojasreport.com.

The Physician Salary Comparison Is Methodologically Inconsistent

The article’s labor cost section states that American physicians make more than their counterparts in other countries and presents this as a cost driver.

The chart footnote, again in small text, reveals the methodology: “U.S. physician salaries are for general internal medicine physicians. Salaries for other countries’ physicians are for general practitioners.”

This is not a comparable data set.

General practitioners earn less than internal medicine physicians in every healthcare system worldwide. The article compared a higher-compensated US specialty against lower-compensated international equivalents and presented the result as a labor cost analysis. The US number at $245,000 is being compared against GP income in countries where that specialty earns less than the equivalent US specialty would.

A genuine comparison would use equivalent specialties. Or it would acknowledge the methodological limitation in the body of the article, not in footnote text after the conclusion has already been drawn by the reader.

Beyond the methodology, the comparison contains no structural context. US physicians graduate with an average of $250,000 in medical school debt at 6-7% interest. On a 10-year repayment schedule, that is approximately $33,000 annually in debt service before a single clinical hour is worked. UK physicians attend government-subsidized medical schools. Their debt burden at graduation is a fraction of that of their American counterparts.

US physicians, if independent, pay their own malpractice insurance, $20,000 to $150,000 annually, depending on specialty and geography. Their own health insurance. Their own practice overhead. None of this appears in the income comparison.

When you net physician income for debt service, malpractice, benefits, and overhead, the comparison to European counterparts looks substantially different than the headline chart suggests.

The article presented the headline as if it were the economic reality.

The Consolidation Section Names The Effect And Hides The Cause

The Journal correctly identifies that hospital consolidation has produced pricing power. Cities and communities dominated by single systems allow those systems to command higher rates from insurers. The map is accurate. The 21% monopoly figure is real.

What the article never explains is the mechanism that drove consolidation in the first place.

When a health system acquires an independent physician practice, the clinical reality does not change. The same physician sees the same patients. The same procedures are performed. The same outcomes are produced.

The billing entity changes.

Under a hospital tax ID, the same procedure is reimbursed at 200-300% of the independent practice rate. Medicare and private insurers pay dramatically more for the same work performed in a hospital outpatient department than in an independent physician's office. This differential is called the site-of-care payment differential. It is embedded in the Medicare fee schedule by design.

Health systems understood this arithmetic before the physicians they were acquiring did. The acquisition of an independent cardiology or orthopedic group is not primarily a clinical decision. It is a billing optimization. The system acquires the physician, converts the practice to a hospital outpatient department, and immediately captures 200-300% more reimbursement for identical services.

The share of physician-owned private practices fell from 53% in 2012 to 26% by 2022. Not because employed physicians provide better care. Because the fee schedule made acquisition more profitable than competition.

The consolidation map the Journal published is a consequence of this differential. The article shows the map. It never explains the mechanism that produced it. That is the most important missing sentence in the entire piece.

No one is coming to fund independent medicine journalism. So physicians are doing it themselves. 100,000+ strong. If this is worth something to you, put something behind it. read.rojasreport.com.

Administrative Costs: The Number Is Named. The Beneficiary Is Not.

Twenty-five percent of US healthcare spending is on administration. Billing, claims processing, customer service, and financial transactions. The article names the cost. It does not name who profits from the complexity that produces it.

Prior authorization exists as a constructed apparatus. Physician practices employ staff whose sole function is to request permission from insurers to provide care that has already been ordered. The insurer employs staff whose sole function is to deny, delay, or modify those requests. Neither population delivers a single unit of clinical care. Both are paid from the healthcare dollar.

The OIG found that a significant percentage of prior authorization denials in Medicare Advantage were subsequently reversed on appeal, meaning the care was appropriate, the denial was incorrect, and the delay was due to a product issue rather than a quality-control outcome.

UnitedHealth Group reported $370 billion in revenue in 2024. Its subsidiary Optum now employs more physicians than any other entity in the United States. UnitedHealth is simultaneously the insurer designing the prior authorization criteria, the PBM managing the drug formulary, and the employer of the physician submitting the authorization request.

The 25% administrative cost does not exist in the abstract. It exists inside organizations with names, shareholders, and quarterly earnings calls. The article names the cost. It does not name the organizations extracting it.

What The Article Did Not Cover At All

Certificate of Need laws. Forty states maintain regulations requiring government approval before new hospitals, surgery centers, or imaging facilities can be built. These laws were originally designed to prevent oversupply. In practice, they function as incumbent protection. Existing hospital systems are the primary participants in CON review hearings. They testify against new entrants. The monopoly map the Journal published did not appear by accident. It was built in part by regulations that existing systems lobbied to maintain. CON laws do not appear in this article.

Price transparency. Hospitals have been legally required to publish their negotiated rates since 2021. A functioning market requires prices. Healthcare has been deliberately kept opaque by the same systems that profit from that opacity. Compliance with transparency requirements has been incomplete. Enforcement has been weak. The article identifies high prices as the primary cost driver and never mentions that the legal requirement to make those prices visible has been systematically resisted. That resistance does not appear.

The nonprofit tax exemption. Large nonprofit hospital systems pay no federal income tax, no property tax in most jurisdictions, and no state income tax. The value of this exemption across the nonprofit hospital sector is estimated at $30-50 billion annually. In exchange, nonprofit status requires the provision of community benefit. Multiple peer-reviewed studies have found that the value of tax exemptions often exceeds the community benefits provided by large systems that report billions in operating surpluses. The implicit public subsidy that flows to nonprofit systems does not appear in this article.

Private equity extraction. KKR, Blackstone, Apollo, and their peers have deployed hundreds of billions of dollars into healthcare acquisitions. The private equity model follows a documented pattern: acquire, extract administrative cost reduction, load the entity with acquisition debt, increase volume through aggressive billing, and exit within five to seven years. The communities left holding facilities weakened by debt and extraction cycles are not represented in the return calculation. Private equity’s role in healthcare cost inflation has been documented in peer-reviewed literature. It does not appear here.

340B pharmaceutical program capture. The 340B program was designed to allow safety-net hospitals serving low-income populations to purchase drugs at significantly reduced prices. The savings were intended to cross-subsidize care for the underserved. The program has expanded dramatically to include large nonprofit health systems that do not primarily serve low-income populations. The program’s capture by large systems does not appear in this article.

The systems this reporting exposes have million-dollar communications budgets. This publication has readers who give a damn. If that matters to you, fund it. read.rojasreport.com.

The Utilization Argument Inverts The Causation

The article presents rising healthcare utilization as a cost driver and correctly notes that GLP-1 drugs for weight loss have increased spending. Both observations are accurate.

The causation runs in the other direction.

Utilization distortion is a predictable consequence of price opacity and misaligned incentives. When patients cannot see prices, they cannot make rational decisions. When physicians practice in systems with volume-based revenue incentives, clinical decisions are made inside a financial context that the article never examines. When insurers design benefit structures that make high-cost system-owned facilities appear equivalent to lower-cost independent facilities, patients consume more expensive care without knowing it.

Blaming utilization without addressing the opacity and incentive structures that produce it is the equivalent of blaming traffic without mentioning that the road was designed with no exits.

A functioning market self-regulates utilization through price signals. Healthcare has been deliberately kept opaque. The article identified the symptom and omitted the cause.

One Final Observation

The article ends with a disclosure: “This explanatory article may be periodically updated.”

A living document with no correction log.
Claims can be quietly revised.
Context can be silently added.
The initial frame, the one most readers will absorb and remember, has already done its work.

The Conclusion: The Article Does Not Reach

American healthcare costs too much.
On this, the article and I agree completely.

The causes it identifies, consolidation, administrative overhead, drug pricing, physician compensation, and utilization, are real factors. None of them are invented.

The picture constructed from those factors is incomplete.

The facility fee differential that drove consolidation is absent.
The PBM apparatus used to extract drug pricing margins is acknowledged in a footnote but never explained.

The nonprofit tax subsidy is invisible.
CON law incumbent protection is not mentioned.
Private equity extraction is not examined.
Price transparency resistance is not named. 340B capture does not appear.

The physician salary comparison uses different specialties across countries, and that fact is buried in a footnote after the conclusion is drawn.

The result is an article that is accurate about what it shows and strategic about what it hides. The audience finishes reading knowing that healthcare costs too much and believing that physician compensation, drug company behavior, and patient utilization are the primary causes.

The systems that actually determine the cost and benefit from the audience believing something else do not appear.

There is a name for this technique.

Selective Illumination.

It is more dangerous than a false argument because it cannot be refuted by fact-checking. Every number in the article is accurate.

What is missing cannot be found by reading it more carefully.

It can only be found by asking what was never there.

-Rojas out.

GLOSSARY

Selective Illumination: The technique of presenting accurate data within a frame that produces a predetermined conclusion by omitting structural context. Cannot be refuted by fact-checking because the individual facts are true.

Site-of-Care Payment Differential: Medicare and commercial insurers pay higher rates for the same procedure when it is billed under a hospital tax ID rather than a physician’s independent practice. Same physician. Same patient. Same procedure. Different billing entity. Different reimbursement.

Pharmacy Benefit Manager (PBM): The intermediary that manages drug benefits on behalf of insurers. Negotiates rebates from drug manufacturers. The spread between the list price and the net price after rebates is where significant margin is extracted.

Certificate of Need (CON) Law: State regulations requiring government approval before new healthcare facilities can be built or expanded. Existing systems participate in CON hearings. The practical effect is incumbent protection.

340B Program: Federal program allowing certain hospitals to purchase outpatient drugs at significantly reduced prices. Originally designed for safety-net hospitals. Expanded to include large nonprofit systems that do not primarily serve low-income populations.

Prior Authorization: The process by which a physician must obtain insurer approval before providing care that has already been ordered. The OIG found that a significant percentage of Medicare Advantage denials were subsequently reversed on appeal — meaning the care was appropriate and the delay was the outcome, not a quality control measure.

Independent physicians are right on the policy.

They have lost at every turn.

That is not a moral failure. That is a strategic one.

The Healthcare Advisory Committee is the latest example. Eighteen seats. Selected from more than 400 nominations. Advising the federal government on Medicare, Medicaid, physician payment, and claims processing. Announced March 26, 2026.

The roster includes the CEO of Sanford Health, the CFO of Cleveland Clinic, the chief strategy officer of Intermountain Health, the CEO of the country's largest health information network, a venture capitalist, and Tony Robbins.

Zero independent physicians hold a seat.

The question worth asking is not why.
The question worth asking is how, and whether independent physicians are willing to do what it takes to change it.

IN TODAY’S ARTICLE:

• How advisory committees become structural advantages for incumbents without anyone doing anything illegal

• Who is in the room, what they represent, and why their presence is logical

• The open intelligence file at hac.rojasreport.com, every member, every affiliation, every conflict on the record

• What independent physicians would need to become to stop losing

Glossary at the bottom of today’s article.

THE MECHANISM

Regulatory capture at its most durable does not require a lobbyist, a check, or a phone call. It requires a nomination window and a Federal Register notice.

The Federal Advisory Committee Act has governed federal advisory bodies since 1972. It mandates balanced viewpoints, geographic representation, demographic diversity, and a transparent process. It is a well-designed law. It does not solve the problem of who has the apparatus to respond to a nomination window at scale.

Sanford Health has a government affairs team. Cleveland Clinic has a government affairs team. Intermountain Health has a government affairs team. The American Hospital Association, whose incoming chair sits on this committee, spent more than $29 million lobbying the federal government in recent years. That infrastructure does not exist to win arguments. It exists to show up first.

The solo physician in Tulsa has a patient at 7 am.

That asymmetry is not corruption.
It is the compounding interest of incumbency.

Every nomination window that incumbents flood and independent physicians miss makes the next one harder.

The infrastructure gap compounds.
The roster gaps compound.
The policy outcomes compound.

This is not new. The ACA’s Independent Payment Advisory Board followed this logic. MedPAC, the commission that advises Congress on Medicare payment rates, follows this logic. Every administration has run some version of this process. The incumbents are simply better at the game than the people they displace.

EXHIBIT A

The Healthcare Advisory Committee is not a scandal. It is a case study.

HHS and CMS reviewed more than 400 nominations. The process was transparent, FACA-compliant, and publicly announced. The committee meets in public, consistent with federal transparency requirements.

Here is who the process produced.

William Gassen is the president and CEO of Sanford Health, one of the largest integrated health systems in the Dakotas and upper Midwest. He is also the AHA chair-elect designate. The American Hospital Association has spent more than $29 million lobbying the federal government. Its core policy positions include opposition to physician-owned hospital expansion, defense of facility fee structures, and resistance to CON law reform. The incoming chair now advises the committee that will make recommendations on Medicare physician payment rates.

Dennis Laraway is the CFO of Cleveland Clinic.

Dan Liljenquist is the chief strategy officer of Intermountain Health. A former Bain consultant, he built Civica Rx, a nonprofit generic drug manufacturer, and has shaped how large integrated systems engage federal policy.

Russ Thomas is the CEO of Availity, the largest health information network in the country. Availity processes claims between physicians, hospitals, and insurers. The committee will advise on real-time data infrastructure and claims processing modernization.

Clive Fields, MD, is the co-founder and chief medical officer of VillageMD, a corporate primary care chain backed by Walgreens operating at national scale.

David Carmouche, MD, is the chief clinical transformation officer at Lumeris, a value-based care and managed care infrastructure company.

Sebastian Caliri is a partner at 8VC, a venture capital firm with proximity to the current administration’s healthcare policy orbit. Before 8VC, he led healthcare at Palantir.

Kimberly Brandt and Stephanie Carlton hold ex officio seats as CMS’s deputy administrator and chief of staff respectively. Brandt’s background spans government, lobbying, and private equity. Carlton came from McKinsey.

Tony Robbins co-founded Fountain Life, a longevity diagnostics company charging $21,500 per year for subscription health services, with $108 million raised. He also holds equity in Celularity, a stem cell therapeutics company that has raised $250 million. RFK Jr. approached Robbins twice as a potential VP running mate before this appointment.

If you ran any of the institutions represented above, you would have done exactly what they did. You would have submitted your best candidate, supported the nomination with institutional resources, and made the case. That is not corruption. That is competence.

Sanford Health has a government affairs team.
You have this. The math is not complicated.

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THE ABSENCE ARCHITECTURE

The missing seats are not random. They are a map.

No independent physicians in private practice. No physician-owned hospital operators. No rural hospital administrators outside a consolidated system. No direct primary care physicians. No patient advocacy organizations. No healthcare antitrust experts. No independent emergency medicine groups. No physicians have testified against hospital consolidation. No representatives of uninsured or underinsured patients. No medical workforce or student debt specialists.

Read that list against the active legislative calendar.

Section 6001, which restricted physician-owned hospitals, is a live reform fight. No physician-owned hospital operator holds a seat. Hospital consolidation cases are in federal courts. No antitrust expert holds a seat. Alternative payment models for independent practice are in markup. No direct primary care physician holds a seat. Surprise billing implementation remains contested. No independent emergency physician holds a seat.

The absences are not an oversight. They are a diagram of what the current structure benefits from leaving undisturbed.

Here is the harder version of that same fact: independent physicians had the same nomination window. More than 400 nominations came in. The number from the organized independent physician infrastructure is not zero. It is far smaller than the incumbent share, and the selection reflects that.

The question for independent physicians is not why they were excluded. The question is why they are not yet the kind of institutional actor that makes exclusion impossible.

THE NONBINDING ARCHITECTURE

The committee will provide non-binding recommendations.

That phrase appears in the official announcement as a disclosure. It functions as something else.

The architecture is non-binding, not the disclaimer. If the committee recommends policies that align with incumbent interests, those recommendations enter the policy process with the credibility of a federal advisory body. If they do not, HHS declines to act with no consequence. The incumbents seated on this committee cannot lose within this structure.

This is the structural outcome.

Cleveland Clinic has a CFO advising the federal government on Medicare sustainability. You have this publication.
One of those costs $100 a year.

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THE TONY ROBBINS QUESTION

An entrepreneur with a $21,500-per-year longevity diagnostics company and $108 million in raised capital sits on a committee advising Medicare and Medicaid policy.

One of the committee’s five stated priorities is the expansion of real-time data and the delivery of precision care. Fountain Life and Celularity operate in diagnostics and regenerative medicine. CMS coverage expansion in those categories affects both companies.

That seat either signals an effort to create outsider optics without changing incumbent composition, or it signals that the committee’s purpose is not structural reform.

Both answers are worse than the other.

THE THIRTY-MINUTE LINE

The team built hac.rojasreport.com in thirty minutes.

It documents every member of the Healthcare Advisory Committee: their role, their employer, their sector affiliation, and the specific committee mandates their background intersects with. The data comes from the CMS press release and publicly available professional records.

HHS reviewed more than 400 nominations over months and produced a committee. The team produced an intelligence layer for that committee in thirty minutes.

That gap is not a criticism of the process. It is a demonstration of what organized, resourced actors do when they decide the game is worth playing.

If a member’s affiliation is incorrect, the record is corrected.
If there is a material conflict that should be on file, it is added.
This is an open intelligence record.
Scrutiny is invited, and corrections will be published.

Independent physicians have been right about the policy for twenty years. Consolidation raises costs. Physician employment reduces competition. Facility fees are an economic fiction. The Avalere data confirms it. The DOJ confirms it. The FTC confirms it.

Being right is not sufficient.

The incumbents on this committee did not earn their seats by being right. They earned them by showing up with infrastructure.

That is fixable.

The site is live.
The record is open.
The game is still being played.

Independent physicians can lose it again.
Or they can decide to start showing up.

The AHA spent $29 million last year making sure the right people were in the right rooms. You can spend $10 a month making sure someone is watching.

SUPPORT THE ROJAS REPORT

-Rojas out.

GLOSSARY

Federal Advisory Committee Act (FACA): The 1972 law governing federal advisory committees. Requires balanced viewpoints, geographic representation, and demographic diversity. Does not require that institutions without nomination infrastructure receive equal representation.

Regulatory capture: The condition in which an advisory or regulatory body advances the interests of the industry it oversees rather than the public interest. Does not require corruption. Requires only that the people with the most to gain are the people in the room.

AHA (American Hospital Association): The primary trade and lobbying organization for U.S. hospitals. William Gassen, its chair-elect designate, holds a voting seat on the Healthcare Advisory Committee.

Availity: The largest health information network in the United States. Processes claims between physicians, hospitals, and insurers. Its CEO, Russ Thomas, holds a voting seat on the committee advising on claims processing modernization.

Non-binding recommendation: A formal advisory output that carries institutional credibility without legal force. Can inform policy when useful to the administering body. Can be set aside when it is not.

Independent practice: A physician practice not owned by, employed by, or contractually controlled by a hospital system, private equity firm, or corporate entity. Approximately 12% of physicians remained in independent practice as of the Avalere/AIMPA whitepaper, September 2024.

Fountain Life: A longevity diagnostics company co-founded by Tony Robbins and Peter Diamandis. Annual subscription priced at $21,500. Has raised $108 million across Series A and B rounds.

SOURCES

“HHS and CMS Announce Healthcare Advisory Committee Members.” CMS.gov, March 26, 2026.

“Kennedy, Oz announce Healthcare Advisory Committee members.” STAT News, March 26, 2026.

“HHS announces members of Healthcare Advisory Committee.” AHA News, March 26, 2026.

hac.rojasreport.com. Member profiles accessed March 30, 2026.

Avalere Health / AIMPA. Medicare Service Use and Expenditures Across Physician Practice Affiliation Models. September 2024.

Physicians and clinicians generate the revenue.
Physicians and clinicians carry the clinical risk.
Someone else owns the equity.

IN TODAY’S ARTICLE:

• Why were the capital markets that built your competitors designed to exclude independent physicians

• The $14.2 billion flowing into healthcare technology and who’s on the cap tables

• How the PhyCap Fund is structured to put physicians on the equity side for the first time

• How to get in at $50K minimum before the fund closes

Glossary at the bottom of today’s article.

THE CAPITAL EXCLUSION

$14.2 billion in healthcare venture capital was deployed last year.

Almost none of it reached independent physicians.

The technology that funding built was designed for health systems: revenue cycle platforms, clinical decision tools, and workflow management systems. It integrates with the health system infrastructure. It scales inside hospital contracts. It makes hospital operations more efficient.

That is not neutral. That is strategic.

Every dollar of healthcare technology capital that flows into the hospital orbit makes hospital-affiliated practices more efficient and independent practices comparatively less efficient. The financing gap is not a market failure. It is the market working exactly as designed.

The healthcare cartel counts on you not paying attention.
100,000+ physicians refuse to comply. Join them.

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THE 12% PROBLEM

Avalere studied physician practice affiliation models across five specialties in September 2024.

12% of physicians remain in unaffiliated private practice.

When physicians transitioned to hospital employment, Medicare costs increased $1,327 per patient per year. That value did not disappear. It moved. It moved to the hospital system balance sheet — and to the equity held by the institutions and investors who financed the consolidation.

Physicians generated that value. Physicians bore the patient relationships, the clinical risk, and the administrative burden that made consolidation possible. Someone else owns the upside.

For thirty years, that asymmetry was treated as inevitable. It is not inevitable. It is a financing gap.

THE FUND

PhyCap Fund is a $10 million early-stage venture fund investing Pre-Seed through Series A in healthcare technology companies.

The focus is narrow: companies that reduce the structural disadvantages that make independent practice harder than it has to be. Administrative burden. Workflow dysfunction. Billing and compliance friction consumes clinical time and generates no patient value.

The people who built this fund are not analysts. They are practicing physicians and clinicians who live inside the problems the portfolio companies are solving.

The PhyCap General Partners:

Paul Slosar, MD MHCDS — Orthopedics, Spine Surgery
Robin Noble, MD, MHCDS — OB, Gynecology
Fred Liss, MD — Orthopedics, Hand Surgery

Vipul Kella, MD, MBA — Emergency Medicine
Joseph Jasser, MD, MBA — Internal Medicine
Tim Martens, MD Ph.D — Pediatric Cardiothoracic Surgery

Giovanni Lorenz, MD — Radiology, Cardiothoracic
Alex Tang, PA-C, MBA — Physician Assistant

8 GPs. Seven specialties. Every one of them has sat across the table from a patient while the administrative weight of a broken system piled up behind them.

The current portfolio:

Clear Health — pre-service patient billing platform for hospitals and ASCs, consolidating all provider and insurance charges into one bill and driving 40% higher upfront collections before the patient arrives.

BioReact — AI-powered bioprocess optimization platform, running up to 10,000 in-silico simulations to identify optimal conditions before a single experiment runs. Techstars-backed.

CompliantRx — AI compliance automation for DME providers, catching documentation gaps before claims are denied and reducing audit risk.

PhyCap selected each company because it attacks a problem this publication has spent months documenting. The thesis is not abstract. The documentation is in the archive.

You can learn how the system works.
Or you can keep being surprised when it works against you.
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WHY PHYSICIAN GPS ARE DIFFERENT

The Silicon Valley venture capital brings a network of engineers, operators, and institutional relationships.

PhyCap physicians bring something that cannot be purchased: clinical credibility and real-world market access inside the practices that will adopt or reject a product.

When a PhyCap portfolio company needs to validate a workflow tool, it does not hire a consulting firm to simulate physician behavior.

It has practicing physicians and clinicians already inside the fund who can test, critique, and champion from day one. That shortens the feedback loop. It eliminates credentialing delays that can kill otherwise viable products before they reach scale.

A pediatric cardiothoracic surgeon.
Orthopedic surgeons.
An emergency physician.
An OB-GYN. A hand surgeon.
A radiologist.
A PA.
An internist.

That is ’t a board of advisors assembled for optics.
That is a clinical and technical intelligence network embedded in the fund structure.

THE TERMS

Fund size: $10 million.

Minimum LP commitment: $50,000.
Accredited investor status required.

Investment stage: Pre-Seed to Series A.
Sector focus: Healthcare technology reducing barriers to independent practice.

The conversation starts at PhyCapFund.com.

No one is coming to save independent medicine.
So we’re saving each other. 100,000+ physicians. One signal.
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THE CLOSING ARGUMENT

The consolidation playbook has been running for three decades.

It has been financed by capital markets. It has been protected by policy. It has been accelerated by technology built specifically for the acquirer.

The architects of that playbook counted on independent physicians being too busy, too isolated, and too excluded from capital to build a counterweight.

PhyCap Fund is the counterweight.

The physicians who read this publication have already accepted the thesis. The fund does not need to educate them on the opportunity. They documented it.

If you want to invest in the infrastructure that supports independent practice rather than watch someone else accumulate the equity your work generates, the conversation starts at PhyCapFund.com.

-Rojas out.

GLOSSARY

LP (Limited Partner): An investor in a venture fund. LPs provide capital; the General Partners make investment decisions. LPs receive returns proportional to their investment when portfolio companies exit.

GP (General Partner): The managing partners of a venture fund who make investment decisions, source deals, and work actively with portfolio companies. PhyCap’s GPs are practicing physicians and clinicians, not professional investors.

Pre-Seed / Series A: Funding stages for early-stage companies. Pre-Seed is the earliest institutional capital, often before a product has significant revenue. Series A is the first major institutional round, typically after a product has demonstrated market traction.

Accredited Investor: An individual or entity that meets SEC income or net worth thresholds, qualifying them to invest in private securities offerings not registered with the SEC.

Unaffiliated Private Practice: A physician practice with no ownership or employment relationship with a hospital system, health system, or corporate entity. The 12% figure from Avalere (2024) refers to this category.

Cap Table: A record of who owns equity in a company and in what proportion. “Being on the cap table” means holding an ownership stake in a company, not merely providing labor or services.

SOURCES

Avalere Health / AIMPA. Medicare Service Use and Expenditures Across Physician Practice Affiliation Models. September 2024.

Rock Health. 2024 Digital Health Venture Funding Report. Rock Health, 2024.