The OhioHealth Settlement and the Hidden Power of Hospital Contracting

How much control should hospitals have over how medical insurance plans are designed? 

Image source: Courtesy of OhioHealth Newsroom

A CASE ABOUT CONTRACTS, NOT PRICES 

When Americans talk about the cost of healthcare, they usually point to the obvious culprits: expensive surgeries, high insurance premiums, or eye-watering hospital bills. But some of the biggest drivers of those costs operate almost entirely out of sight. The OhioHealth settlement, announced in June 2026 by the U.S. Department of Justice and the Ohio Attorney General’s Office, is not primarily about how much care costs on paper. It is about something less visible but arguably more important: who gets to determine the structure through which those costs are negotiated in the first place. 

The case focuses on OhioHealth, a major hospital system controlling roughly 35 percent of inpatient general acute care services in the Columbus, Ohio region. Regulators argued that this level of market presence made OhioHealth a “must-have” provider for most insurance networks in the area. In practical terms, that designation meant insurers could not realistically design competitive health plans without including OhioHealth hospitals, giving the system leverage that extended beyond individual patient pricing and into the design of entire insurance products. 

THE CONTRACTING STRUCTURE AT ITS CORE

At the center of the complaint were not direct price increases, but a set of contractual restrictions that determined how insurers could structure plans. The government alleged that OhioHealth required insurers to include almost all of its 16 hospitals in standard network offerings, limiting insurers’ ability to selectively contract with lower-cost providers. This matters because selective contracting is one of the main mechanisms insurers use to create price pressure in healthcare markets. 

The lawsuit also targeted anti-steering and anti-tiering provisions. These clauses prevented insurers from placing OhioHealth facilities in higher-cost tiers or from financially incentivizing patients to choose alternative providers. By limiting that mechanism, OhioHealth’s contracts presumably weakened one of the only remaining forms of price competition in hospital markets. 

Finally, regulators pointed to restrictions on price and quality transparency. Insurers were allegedly blocked from clearly communicating cost differences or steering patients toward more affordable options. This effectively meant that even when cheaper care existed, the system made it harder for patients to see or act on it. 

WHY THIS MATTERS BEYOND ONE HOSPITAL SYSTEM 

The deeper issue is that OhioHealth is not unusual in structure, only in scrutiny. Across U.S. healthcare markets, large hospital systems increasingly function as “must-have” providers, meaning insurers cannot realistically sell competitive plans without including them. In those conditions, bargaining power moves away from insurers and toward providers that control access to essential care networks. 

The DOJ and Ohio regulators argued that these contracting practices effectively excluded lower-cost competitors from roughly 85% of the commercial insurance market in Columbus, not through direct exclusion, but by making alternative insurance designs commercially not possible. The result is a system where competition still exists formally, but is heavily restrained in practice by contract design rather than explicit price setting.

Image Source: KFF.org, 2026

The contrast with Medicare, or America’s federal health insurance program, makes this issue even more striking. Unlike commercial insurers, Medicare generally sets reimbursement rates administratively rather than negotiating individualized contracts with hospital systems. Hospitals may disagree with Medicare's payment levels, but they cannot use private contracting provisions to influence how the program designs its networks or steers patients. Commercial insurance works very differently. Because rates and network participation are negotiated privately, dominant hospital systems can exert far greater influence over the structure of insurance products themselves. The OhioHealth case suggests that this flexibility, while often proclaimed an important part of market competition, can also become a source of market power when one provider becomes too important for insurers to leave out. 

LOOKING AHEAD 

The most important implication of the OhioHealth settlement is not the specific restrictions it imposes, but the precedent it sets. Even hospital systems without absolute monopoly control can now face enforcement action if their contracts significantly limit how insurance markets function. 

This matters because healthcare is one of the most problematic sectors in the U.S. economy. According to a report from the White House Council of Economic Advisers, eliminating practices such as anti-steering provisions and all-or-nothing contracts could reduce hospital and physician prices by an average of 18 percent in directly affected markets. Those lower provider prices would, in turn, reduce employer-sponsored insurance premiums in those same markets by an estimated 6.5 percent, saving approximately $1,755 per family each year. If similar contracting reforms were adopted nationally, the CEA projects they could generate roughly $45 billion in annual employer-sponsored insurance premium savings, equivalent to about 1.6 percent of total employer-sponsored insurance spending. 

The report also points to an often-overlooked consequence of restrictive hospital contracting: their impact on rural healthcare. Large multi-hospital systems can use all-or-nothing contracting to bundle together facilities across large regions, requiring insurers to include both highly demanded urban hospitals and affiliated rural facilities in the same agreement. While this may appear to strengthen access to care, it can actually allow large hospital systems to extend the bargaining power of their dominant urban hospitals into smaller markets where independent rural hospitals would otherwise have a stronger opportunity to compete. As a result, rural providers may face greater difficulty negotiating with insurers, while employers and patients may lose access to more lower-cost network options. 

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Takedowns is a weekly column by Katya Chikanov examining major antitrust settlements across industries and what they reveal about market competition and economic policy.