


You can have all the money you want in your health savings account, but if there is only one hospital system in your city, then you really have no choice at all. You are going to pay the price that hospital dictates and see the doctor they tell you to see.
Unless we can find a way to roll back the consolidation feeding frenzy of the past two decades, patients will never be empowered to find the care they want at prices that are affordable to them.
CLICK HERE TO READ THE WASHINGTON EXAMINER'S EMPOWERING PATIENTS IN HEALTHCARE SERIESThere have been almost 2,000 hospital mergers over the last 20 years, reducing the number of hospitals from around 8,000 in 2020 to around 6,000 today. There have been tens of thousands more physician practice acquisitions. Some cities, such as Boston, Pittsburgh, and San Francisco, are completely dominated by a single healthcare provider.
Consolidation in some industries can be good. But empirically in healthcare, it has proven to be a disaster, leading to higher costs, less choice, and less quality care. This is equally true of both for-profit and nonprofit organizations.
A big reason healthcare consolidation has caused so much harm to consumers is that it is not market driven. Government regulations and payment policies at the state and federal levels are largely to blame for the consolidation boom.
President Barack Obama’s Affordable Care Act was intentionally designed to incentivize hospital consolidation. The thinking was that larger, more centralized providers could better coordinate and deliver care for consumers at lower costs. This is one reason why Medicare pays different rates for the same exact procedure if it is performed by different providers.
For example, if an independent physician were to perform an echocardiogram on a Medicare patient, the practice would be paid $188. But if that same physician would perform the exact same procedure in the same exact office, but he had sold his practice to a large hospital, then the hospital would be reimbursed $450 for an outpatient service.
With these Medicare price controls tilting the scale so strongly in favor of consolidation, no wonder hospitals have bought out so many formerly independent practices.
State laws play a crucial role in limiting competition as well. Many states have “certificate of need” laws that require investors to get government approval before a new hospital can be opened. Established hospital networks that have monopoly power over a region’s healthcare system also have monopoly power over local politicians, making it next to impossible for entrants to get the political approval they need to build new healthcare facilities.
If we want to enjoy the benefits that an empowered healthcare revolution can bring us, we will have to free the supply-side constraints preventing new healthcare options from coming online. We must also undo the Affordable Care Act pricing and regulatory policies that favored consolidation and centralizing over competition.
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