The Business of Being Sick

The American healthcare system no longer just treats illness. It routes it, codes it, prices it, and bills it. Nonprofit hospitals receive tax breaks larger than their charity care. Private equity staffs emergency rooms. Insurers manage access through algorithms. Pharmacy middlemen decide which drugs you are allowed to take. Lobbying money shapes the rules. Patients feel the delays, the denials, and the bills. This piece follows the money, the ownership, and the incentives to ask a simple question: When sickness becomes a business model, who is the system actually built to serve?

By Matt Stone

Americans still talk about hospitals as if they are places where care happens first and money gets sorted out later. That is not how the system is built anymore.

Modern American healthcare is increasingly organized around revenue, leverage, coding, contracting, and control. Care still happens, often heroically, but it happens inside a structure that has learned how to turn sickness into cash flow.

U.S. health spending reached $5.3 trillion in 2024. Hospital care alone accounted for about $1.63 trillion. That is not a side market. That is one of the main ways power moves through American life.

Start with the gentlest lie in the system, the nonprofit halo. Americans hear “nonprofit hospital” and imagine charity, restraint, civic obligation, something morally different from a corporation. But KFF estimated that nonprofit hospital tax exemption was worth about $28.1 billion in 2020, including $14.4 billion in federal tax advantages and $13.7 billion in state and local advantages.

That state and local piece included about $5.0 billion in property tax exemption and $5.7 billion in sales tax exemption. KFF also found that the value of those tax breaks exceeded estimated charity care costs in that same year. The point is not that every nonprofit hospital is fake. The point is that the moral language and the financial structure no longer match.

And when a giant hospital system does not pay property taxes, that money does not disappear. Counties still need roads. Cities still need firefighters. Schools still need funding. Water systems still need repair. So who absorbs the loss?

Homeowners do. Renters do. Small businesses do. Local governments do. The public is told it is subsidizing compassion. Often it is subsidizing institutional market power wrapped in charitable branding.

Then there is the openly corporate side, where the euphemisms get thinner and the math gets clearer. HCA reported 190 hospitals and roughly 2,500 ambulatory sites of care at the end of 2025. Tenet reported that its USPI arm had interests in 533 ambulatory surgery centers and 26 surgical hospitals across 37 states.

Community Health Systems reported 65 affiliated hospitals and more than 900 sites of care. This is the real map now. Not just hospitals, but sprawling capture networks of surgery centers, urgent care sites, imaging facilities, physician practices, freestanding emergency rooms, and outpatient channels built to keep patients moving through the most profitable parts of the machine.

That shift matters because it changes the logic of healthcare. The old image was simple. You got sick. You went to the hospital. You were treated. The actual structure is now built to sort, route, code, and monetize.

A hospital is no longer just a place where care is delivered. It is a platform for patient throughput. It is a logistics system for bodies. It is every doorway through which vulnerability can be translated into reimbursement.

And hospitals are only one layer. One of the most overlooked parts of the system is physician staffing. Many patients still assume the doctor in front of them works for the local hospital or some stable medical group rooted in the community. In a growing number of cases, that is false.

At a 2024 FTC workshop, the agency highlighted evidence that about 40 percent of U.S. emergency rooms were overseen by for-profit staffing groups owned by private equity firms, alongside reports that staffing cuts under these models raised patient safety concerns. That means that in one of the most vulnerable moments of a person’s life, the care environment may be shaped not by local public need but by margin targets, debt obligations, and exit strategy.

Then come the middlemen who are almost invisible until they deny something important. Pharmacy benefit managers control formularies, prior authorization, step therapy, specialty-pharmacy routing, and reimbursement. The FTC reported in 2024 that the top three PBMs, CVS Caremark, Express Scripts, and OptumRx, manage 79 percent of prescription drug claims for about 270 million people.

The FTC also described a market defined by concentration and vertical integration, where the same corporate empires can insure patients, manage drug benefits, steer pharmacy access, and profit from the friction in between. The suffering person experiences this as a forced medication switch, a delay, a rejection, or a phone maze. The corporation experiences it as administration.

That is one of the darkest features of the modern system. The cruelty is often procedural before it is financial. It is the prior authorization that drags on while a condition worsens. It is the cheaper drug you have to fail on before getting the one your doctor wanted in the first place. It is the specialty pharmacy requirement that turns treatment into bureaucracy. It is the exhaustion strategy. It is the realization that the system does not need to say no cleanly if it can wear you down until you stop asking.

The insurer story has also changed. It is no longer just about companies paying claims. It is about vertical control over care itself. Medicaid managed care is now the dominant form of Medicaid delivery. KFF reported in March 2026 that 78 percent of Medicaid beneficiaries, more than 66 million people as of July 1, 2024, received care through comprehensive risk-based managed care organizations, and that this model accounted for about half of total Medicaid spending in fiscal year 2024. Public money is now flowing through corporate contractors on a massive scale. A public promise is being administered through private systems built to manage cost, network access, and utilization.

The same pattern appears in Medicare Advantage, where classification itself becomes a source of profit. MedPAC projected that Medicare Advantage risk scores in 2025 would be about 16 percent higher than they would be for similar beneficiaries in traditional fee for service Medicare, and that even after the coding adjustment they would still remain about 10 percent higher. MedPAC’s March 2026 report projected that for 2026, Medicare Advantage risk scores would still be about 10 percent higher than comparable fee for service scores. That is not just technical noise. It means the system rewards organizations that get better at turning patient classification into payment. It rewards administrative sophistication. It rewards coding intensity. It rewards speed in converting a human being into a revenue category.

This is where people should stop and think. The danger is not just that healthcare is expensive. The danger is that it is increasingly administrative in a way that places consequence before contest. A classification is made. A prior authorization is denied. A network narrows. A discharge gets pushed. A risk score rises. The impact lands first. The explanation comes later, if it comes at all. The appeal process is downstream. The correction process is downstream. The human voice is downstream. By the time a person gets the chance to object, the harm may already be in motion.

And while this structure expands, it protects itself politically. A 2026 JAMA Health Forum study found that hospital-related organizations spent $116.13 million on federal lobbying in 2024. Hospitals and health systems accounted for $70.56 million of that total, while hospital associations accounted for the rest. The American Hospital Association alone spent $24.11 million. These are not weak institutions pleading for survival. They are sophisticated actors using public tax privileges and public reimbursement streams while spending heavily to shape the rules under which they are paid.

So who gets squeezed the hardest? The answer is not random. It is the people with the least leverage, the least mobility, and the least spare money. Medicaid patients are high on the list because their care is increasingly filtered through managed care, cost control, network restrictions, and utilization review.

Rural patients are being squeezed because even where the hospital building remains, the services inside it disappear. KFF reported that from 2010 to 2022, 238 rural hospitals closed obstetrics units while only 26 opened new ones. Care does not have to vanish completely to become unreachable. It only has to move farther away, get narrower, or become harder to access in time.

Pregnant women in maternity-care deserts are being squeezed especially hard. March of Dimes reports that more than 35 percent of U.S. counties are maternity care deserts, affecting more than 2.3 million women of reproductive age and about 150,000 births. These are places without a birthing facility or obstetric clinician.

Women in those areas receive less prenatal care and face worse outcomes. That should end a lot of the public mythology. In the richest country in the world, maternal care is collapsing across huge parts of the map while major healthcare systems still receive tax advantages, public reimbursement, and political access.

Working families are being squeezed too, just in a way that has become normalized. KFF’s 2025 employer survey found that average annual family premiums for employer-sponsored coverage reached $26,993, with workers contributing about $6,850 toward those premiums. That is before deductibles, coinsurance, facility fees, surprise bills, and all the other ways “coverage” can still leave a person financially exposed.

Americans are told they have insurance. Many of them really have conditional access rented at a punishing monthly rate. And everyone pays, including the people who think they are outside it.

Taxpayers fund Medicare and Medicaid. Workers fund employer-sponsored plans through wage suppression and payroll deductions. Patients fund the rest through out-of-pocket costs and debt.

Local communities fund nonprofit hospital privileges through forgone property and sales tax revenue. There is no separate pile of money. The same public finances the system from different directions while institutions describe the arrangement in language soft enough to pass for care.

CMS says private health insurance accounted for 31 percent of national health spending in 2024, Medicare 21 percent, Medicaid 18 percent, and out-of-pocket spending 11 percent. The money comes from the same country. It just leaves through cleaner doors.

The ugliest truth is that this system does not require villains in every room. It only requires incentives that consistently place the patient below the spreadsheet. Many doctors, nurses, pharmacists, technicians, and staff are trying to do humane work inside an inhumane structure. That is part of what keeps the machine stable. The people nearest the patient often still carry moral weight. The institutions above them increasingly carry financial logic. One is trying to keep a person alive. The other is trying to keep the margins smooth.

That is what people need to sit with. American healthcare is not merely expensive. It is increasingly built so that sickness itself functions as an investment environment.

A nonprofit tax break here. A managed-care contract there. A risk-score bump. A staffing cut. A formulary denial. A rural obstetrics closure. A patient calling for the third time while a corporation calls the whole thing optimization.

The hospital still looks like a place where life is protected. Too often, it now sits inside a system that protects revenue first and asks the suffering person to prove they deserve what remains.

Works Cited

Centers for Medicare & Medicaid Services. “National Health Expenditure Data.” U.S. Department of Health and Human Services. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data

Kaiser Family Foundation. “The Estimated Value of Tax Exemption for Nonprofit Hospitals Was About $28 Billion in 2020.” https://www.kff.org/health-costs/issue-brief/the-estimated-value-of-tax-exemption-for-nonprofit-hospitals-was-about-28-billion-in-2020/

Kaiser Family Foundation. “10 Things to Know About Medicaid Managed Care.” https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-managed-care/

Kaiser Family Foundation. “Key Facts About Hospitals.” https://www.kff.org/health-costs/issue-brief/key-facts-about-hospitals/

Kaiser Family Foundation. “2025 Employer Health Benefits Survey.” https://www.kff.org/health-costs/report/2025-employer-health-benefits-survey/

Medicare Payment Advisory Commission (MedPAC). Report to the Congress: Medicare Payment Policy. March 2026. https://www.medpac.gov

Federal Trade Commission. Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. 2024. https://www.ftc.gov

Federal Trade Commission. “Private Equity in Healthcare and Emergency Department Staffing.” FTC Workshop Materials. 2024. https://www.ftc.gov

March of Dimes. “Nowhere to Go: Maternity Care Deserts Across the U.S.” https://www.marchofdimes.org

American Hospital Association. “Hospital Statistics.” https://www.aha.org/statistics

JAMA Health Forum. “Federal Lobbying by Hospital Organizations.” 2026. https://jamanetwork.com/journals/jama-health-forum

U.S. Department of Justice. “RealPage Antitrust Litigation Materials.” https://www.justice.gov/atr

U.S. Government Accountability Office. “Medicare Advantage: Risk Adjustment and Payment.” https://www.gao.gov