Rising costs are dominating kitchen table conversations across the country, and health care is no exception. In response, federal and state regulators have introduced a range of proposals to curb spending and improve efficiencies—some thoughtful, others deeply flawed. As a former emergency medicine physician and now a health care executive with over three decades of experience, I’ve seen what works and what doesn’t. If we’re serious about cost control, we must address three core areas: insurance inefficiencies, pharmaceutical pricing, and infrastructure investments that prioritize prevention and community health. I see a path to sustainable, system-wide cost control.
Escalating costs and the administrative burden
Health care costs are steadily rising. Administrative expenses now account for more than 40 percent of hospital spending on patient care, according to recent data.
Much of the administrative burden stems from insurance-driven challenges. These hurdles not only delay provider approval to deliver necessary care, but also create major obstacles to securing payment after services have been rendered. Hospitals devote significant resources and countless hours navigating complicated claims processes, appealing denials, and managing ever-changing insurer policies just to secure payment for medically necessary care. According to the American Hospital Association, hospitals and health systems are conservatively spending an estimated $40 billion annually on the administrative costs required to comply with health insurer processes.
Make no mistake—health insurers play a critical role in our health system by managing financial risk and facilitating access to care. However, requiring hospitals across the country to employ thousands of staff solely to obtain approval for care or secure payment is deeply inefficient and represents a structural failure that must be addressed. Streamlining these processes would significantly reduce administrative costs: It would drive down overall system expenses and ensure taxpayer-funded programs like Medicare and Medicaid direct more dollars to patient care, not bureaucracy.
Drug pricing and the role of Medicare
The U.S. leads the world in pharmaceutical spending—both in total spending and per capita. According to the CDC, eight in ten Americans 65 and older live with at least one chronic condition, and nearly half manage two or more. Common chronic conditions like hypertension, arthritis, diabetes, and heart disease require ongoing medical management, contributing significantly to health care spending.
To reduce costs, we must expand Medicare’s authority to negotiate drug prices. While the agency is currently authorized to negotiate for a limited set of drugs, broader authority is needed. By leveraging its vast beneficiary base, Medicare could secure better pricing and save taxpayers billions: It would do so without compromising care.
Prevention and infrastructure: The long-term solution
True, lasting cost control requires investment in preventive care, wellness, and community health. The logic is simple: Healthier populations need fewer procedures, fewer medications, and fewer hospitalizations, resulting in lower industry-wide costs.
Continued investments in community-based care, such as ambulatory services, bring care closer to where people live, making it more accessible and convenient. This early and proactive access helps manage chronic conditions, reduce preventable hospital admissions, and minimize reliance on costly emergency room visits. By shifting care to community-based settings, we reduce the overall financial strain on the health care system. In turn, this leads to better patient outcomes and more efficient use of health care dollars.
Policymakers must avoid enacting policies, such as so-called “”site neutral” payment proposals, that would discourage investment in these vital care settings and undermine progress toward a more accessible, affordable health care system.
A path forward
Together, these three pillars—insurance reform, pharmaceutical pricing reform, and investment in preventive care and wellness—represent a clear path to more sustainable, industry-wide cost control. These efforts can reduce waste, lower costs, and most importantly, keep the focus on what matters most: Delivering high-quality, compassionate care to every patient.
Patrick M. O’Shaughnessy serves as president and chief executive officer of Catholic Health of Long Island, a $3.2 billion mission-driven health system comprising six acute care hospitals, three nursing homes, hospice and home health services, and an extensive physician network. A native Long Islander and former emergency physician, Dr. O’Shaughnessy is board-certified in emergency medicine and health care quality and management. He earned his medical degree from the New York College of Osteopathic Medicine, an MBA from Adelphi University, and a master’s degree in population health management from Thomas Jefferson University. An advocate for prevention and population health, he emphasizes social determinants such as food insecurity. He is a licensed pilot who integrates aviation safety principles into clinical operations. Additional details about his experience and leadership can be found on LinkedIn.
