Large hospitals have all the power
Every two or three years—or sometimes more frequently—health care providers and insurance companies sit down to negotiate the prices for a host of medical services. The larger the hospital system, the more power it has in these negotiations, since insurers want to be sure to offer their customers access to the largest facility in town. Thus, when a hospital is large or the only game in town for a particular service, insurers are typically unable to walk away from the negotiating table.
Peter Ubel, in Forbes, describes the situation bluntly:
As hospitals bond together in ever larger networks, their negotiating leverage rises much more quickly than their quality of care. In other parts of the economy, efficiencies of scale usually lead to lower prices. In medical care, any efficiencies of scale that come from hospitals working together are overwhelmed the ability of those same hospitals to raise their prices.