It’s time to take action to reverse hospital consolidation

The lack of competition in the major hospital markets in America increases medical costs for individuals and families. And Congress can do something about it.

In 2020, Americans spent an estimated $4.1 trillion in health care, with hospitals taking the biggest share of that: $1.3 trillion. Centers for Medicare and Medicaid Services (CMS) estimates Hospital spending will grow 6.9% this year, far exceeding the expected growth of the national economy.

Greater hospital costs do not necessarily translate into better value for healthcare dollars.

There are most urban markets, dominated by health care a A small number of hospital companies. Based on the Federal Trade Commission (FTC) metrics, 90 percent of metropolitan statistical areas in America have concentrated hospital markets. These large hospital systems also buy private medical practices. Hospitals and other businesses now own it Approximately half of all physician practices.

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Independent medical practice, the birthplace of the traditional doctor-patient relationship, is fast disappearing.

This concentration of economic power has many costly and undesirable consequences. According to the American Enterprise Institute recently TransferLack of competition in hospitals not only contributes to higher drug prices and thus insurance premiums; It also leads to reduced patient selection, reduced innovation in care delivery and suboptimal quality measures. Frankly, patients suffer.

Government policies helped drive this trend, and government policies (both state and federal) can reverse it. Rand Corporation researchers Transfer that government policies that promote competition and deconcentration of hospital markets could reduce annual hospital spending by about $6.2 billion and $68.9 billion, depending on the “magnitude” of the changes.

Countries that have a large The Care Access and Delivery Authority, has several policy options to improve competition and delivery of affordable care. Among the most effective are: repair or cancellation Certificate of Need (CON), which requires medical professionals to obtain permission from the state to build or expand medical facilities. Both the Federal Trade Commission and the Department of Justice, under both Democratic and Republican administrations, have them selected These state laws are viewed as anti-competitive, and act as barriers to market entry without improving quality or lowering cost.

Congress, too, can take Three big steps To open up hospital markets and improve patients’ access to affordable, high-quality care.

First, Congress could remove legal restrictions on Medicare and Medicaid payments to physician-owned hospitals, including hospitals that specialize in areas such as heart, cancer, and orthopedic care. The restrictions, enacted in 2010 as part of the Affordable Care Act, deny these hospitals large federal healthcare payments that flow into large hospital systems, leaving them in a deeply competitive position.

a Major literature review Conducted by analysts at George Mason University’s Mercatus Center, they show that physician-owned hospitals provide higher-quality care at a lower or “comparable” cost. Obamacare payment restrictions starve these hospitals financially and are a major barrier to entry for others. The health policy consensus group supports deregulation, and Rep. Victoria Spartz (R-IN) has introduced legislation (Flexibility in hospital ownership law) to do exactly that.

Second, Congress can pay Medicare for “neutral site” medical services. Today, Medicare routinely pays medical professionals more if the service is provided in a hospital rather than in a clinic or doctor’s office. By paying the same value for the same service, no matter where it is provided, Heritage Foundation analysts appreciation 10-year taxpayer savings of $63.2 billion.

Since Medicare is the nation’s largest healthcare payer, “location neutrality” payments would have a positive spillover effect in private markets, intensifying competition among providers and lowering costs for patients. Politics has bipartisan potential. Supported by Liberal Brookings Institution Scholars and conservatives Health policy consensus group And embodied in Transparency of the hospital billing actas suggested by Rep. Spartz.

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Finally, Congress could codify federal hospital price transparency rules. Patients and their families are often traumatized by it The cost of a common medical procedure offered by the hospital. That’s because hospitals don’t disclose their prices up front. The bill for a common procedure (such as a hip or knee replacement) can vary by several thousand dollars, even between hospitals in the same geographic area.

To address this problem, the Trump administration a statement Major hospital price transparency rule in 2019. Requires hospitals to publish information on 300 “shoppable” medical procedures with the goal of providing patients with accessible hospital price information. The Biden administration has also embraced the rule.

While initial rule compliance has been slow and uneven, it’s getting better.

Congress can improve policy further by rationing the rule, and standardizing the price form reports, requiring hospitals to publish measures of quality set by state or private consumer organizations. Bipartisan congressional support is out of the question. For example, last year, House Energy and Commerce Committee Chairman Frank Balon (D-N.J.) and ranking member Cathy McMorris Rogers (R-WA). They argued for harsher penalties In hospitals that do not adhere to the rule.

Congress should focus on addressing dysfunctional hospital markets in 2023. Instead of enacting policies like price controls that would further distort markets, lawmakers should adopt a pro-competitive strategy. Members of the House and Senate can make real progress by working together to improve transparency in hospital pricing and performance, deregulate physician-owned specialty hospitals, and level the playing field between competitive hospitals and medical professionals through “site-neutral” Medicare payments.

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