A state investigation concludes a lack of competition is behind the county’s high hospital costs.

A year-long investigation into the high cost of hospital care in Monterey County by the California Office of Health Care Affordability has concluded that a lack of competition between the three main hospitals – Community Hospital of the Monterey Peninsula, Salinas Valley Health and Natividad – is the chief reason why they are some of the highest-priced hospitals in the state.

Previous national studies placed the three hospitals within the top 10 most expensive in California, with CHOMP in first or second place. New data used for the investigation showed that inpatient admission prices for the 10 most common reasons are 31-percent above the San Francisco Bay Area average. Outpatient prices for the most common procedures are 47-percent above the Bay Area average.

The investigation was launched in the wake of complaints by residents and local union members, as well as a meeting held in Seaside in 2024, in which experts came to a similar conclusion that market concentration was driving up costs.

Local hospital leaders bristled at the suggestion, claiming that the data used painted an inaccurate picture and contending that there was “robust” competition between the three facilities. They blamed high labor and operating costs and caring for a high number of patients on Medicare and Medi-Cal, among other factors.

The new report, released on Nov. 13 and discussed at an OHCA board meeting in Sacramento on Nov. 19 (after the Weekly’s deadline) rejects those explanations. Investigators said labor and operating costs were not sufficient to explain the county’s high hospital prices, nor the number of subsidized patients.

The report cited one possible cause – insurance companies consider all three hospitals as “must-haves” in their networks due to the county’s geographic isolation and state network adequacy requirements, “giving the hospitals immense negotiating leverage.” Other contributing factors are a consolidation of physicians with large medical groups, and the possibility of referrals within a network, steering patients away from lower-cost alternatives.

Local hospital leaders continue to reject OHCA’s assertions.

“We take issue with the accuracy of the data used in this report,” says Mindy Maschmeyer, director of communications for Montage Health, CHOMP’s parent company. “The research does not reflect the realities of the cost of providing care in Monterey County.” She says Montage leaders remain “deeply sensitive to the cost of care,” and are committed to working to ensure care remains accessible.

Gary Ray, SVH chief legal officer, said in a statement that the state agency “has repeatedly disregarded our efforts to engage in factual and thoughtful evidence-based dialogue on the many complex issues” surrounding the cost of care locally. He cited the high cost of living and a challenging payer mix. “Nearly 80 percent of residents rely on government insurance plans that reimburse far below the cost of care,” he said.