I've always wondered about this, especially now that I'm in a state where this sort of "keep them in the system" bypassing actually occurs. I was suprised the first time I saw it. It seems scuzzy to me.
I have done this once, sort-of. We bypassed several hospitals with a transfer form rural ED to urban VA hospital, lights and sirens (I know, I know) with a patient with deteriorating respiratory function....just to remain in the VA system. I wasn't comfortable with that either.
For what it's worth, CMS says this: "Hospitals that request transfers must recognize that the appropriate transfer of individuals with unstabilized emergency medical conditions that require specialized services should not routinely be made over great distances, bypassing closer hospitals with the needed capability and capacity."
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R46SOMA.pdf