Why Vertical Integration Is Becoming an RCM Risk, Not Just a Policy Debate
Congress just spent nine hours grilling the CEOs of the largest health insurers on vertical integration, prior authorization, denial rates, and rising costs. The headlines focused on political theater. The real story is something quieter and more dangerous for hospitals.
Vertical integration is no longer just a market structure issue.
It is a revenue cycle exposure issue.
That’s a distinction I’ve been making throughout the RCM 2030 books, and this hearing put the evidence on the public record.
What Congress Actually Surfaced
Lawmakers pressed executives from UnitedHealth Group, CVS Health, Elevance, Cigna, and Blue Shield of California on a simple question: how does vertical integration benefit consumers when premiums keep rising and access keeps getting harder?
Under questioning, a few things became clear.
First, the largest insurers no longer just pay claims. They increasingly own the insurer, the pharmacy benefit manager, the specialty pharmacy, the physician groups, the analytics layer, and in some cases the transaction rails that move claims and payments. That changes where power sits.
Second, there is no shared definition of key metrics that matter to hospitals and patients. One lawmaker cited data showing a 33 percent denial rate for certain marketplace plans. The insurer disputed that and claimed denial rates under 2 percent. Same system. Same patients. Radically different numbers.
That gap is not accidental. It’s leverage.
Third, prior authorization remains a major point of friction. Insurers say they are reducing it. Physicians say they are not seeing relief. Hospitals sit in the middle, absorbing the labor, the delays, and the patient frustration that follow.
None of this is new to anyone working in revenue cycle management. What’s new is Congress finally naming the structure that creates the problem.
Why This Matters for Revenue Cycle Leaders
In RCM 2030, I’ve been blunt about this: the biggest threats to hospital margins are no longer inside the billing office.
They are upstream.
When insurers are vertically integrated, they gain the ability to shape the rules that determine:
What requires authorization
How “medical necessity” is interpreted
How denials are defined and reported
When and how cash moves
How much operational work is pushed onto providers
Hospitals can run a tight revenue cycle and still lose ground if they are operating inside someone else’s friction model.
This is why so many organizations feel like they are doing more work for less return. It’s not because RCM teams suddenly got worse. It’s because the balance of power shifted.
Vertical integration didn’t just consolidate ownership. It consolidated control over time, data, and cash flow.
Denials and Prior Auth Are Not Just Process Problems
One of the most telling moments in the hearing was the denial rate dispute. This is something RCM leaders deal with constantly.
Payers and providers often aren’t even talking about the same thing when they say “denial.” Some count pre-submission edits. Some count first-pass rejections. Some exclude certain lines of business. Some include them. The definitions change depending on who benefits.
That ambiguity is valuable to the party with more leverage.
The same is true for prior authorization. From an RCM perspective, prior auth is not just utilization management. It is a financial control mechanism. It slows access, delays payment, and increases administrative burden, all while shifting risk and labor onto providers.
Hospitals feel this as:
Higher staffing costs
Longer days in A/R
More patient complaints
More downstream bad debt
No amount of back-end optimization fully fixes a problem that is structural by design.
The Patient Always Pays the Price
Vertical integration doesn’t just pressure hospitals. It shows up directly in the patient financial experience.
As premiums rise and ACA subsidies expire, patients face higher out-of-pocket costs. When prior auth delays care or denials land after the fact, patients don’t experience it as “market dynamics.” They experience it as confusion, delay, and bills they don’t understand.
That confusion comes back to hospitals as:
Call volume
Payment plans
Charity care requests
Reputational damage
This is the loop I’ve written about repeatedly. What happens upstream in payer structures eventually lands on the front lines of patient access, billing, and collections.
Why This Confirms the RCM 2030 Argument
This hearing didn’t introduce a new problem. It validated an existing one.
The core message of RCM 2030 is that hospitals cannot plan for the next decade by treating revenue cycle as an internal efficiency exercise. The risk now lives in:
Payer behavior
Market consolidation
Policy changes
Control over data and transaction flows
CFOs and RCM leaders who ignore those forces will keep optimizing the wrong layer.
Congress is now publicly questioning whether the current structure serves patients or providers. Hospitals don’t have the luxury of waiting for that debate to resolve. They have to operate inside it.
What Leaders Should Be Doing Now
This isn’t a call for outrage or ideology. It’s a call for realism.
Revenue cycle leaders should be:
Modeling payer concentration risk explicitly
Tracking denial exposure by payer and product, not just in aggregate
Understanding where definitions differ and why
Investing in front-end prevention, not just back-end cleanup
Preparing for continued pressure on access, timing, and cash flow
Vertical integration is not going away. The question is whether hospitals acknowledge it as a core RCM risk or keep pretending it’s someone else’s problem.
This hearing suggests the era of pretending is ending.
