Congress is searching for answers to the affordability crisis that is straining family budgets across America. Recently, lawmakers have zeroed in on the No. 1 driver of rising costs in healthcare: hospitals.
On April 28, the House Ways and Means Committee questioned major hospital CEOs on their role in healthcare affordability — a first step in holding them accountable for driving higher premiums and out-of-pocket costs for patients. Lawmakers are starting to understand that you can’t talk about healthcare affordability without talking about hospitals.
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Hospitals account for roughly 40 cents of every healthcare dollar spent. Not only that, their prices are rising faster than inflation, wages, and nearly every other part of the healthcare system.
HOSPITALS ARE A PRIME SUSPECT IN THE AFFORDABILITY CRISIS
If Congress is serious about lowering costs for families, employers, and taxpayers, hospital pricing must be part of the conversation. For too long, hospitals have resorted to blame-casting and finger-pointing at other industry leaders to take the spotlight off large corporate hospital systems and their primary role in making your healthcare unaffordable.
But the math is simple. Hospital prices have risen out of control, and when hospital prices go up, premiums go up. When premiums go up, employers shift more costs to workers. Deductibles rise. Out-of-pocket costs rise. There’s no mystery here.
Innocent patients have become victims of billing decisions made in corporate boardrooms far from the communities those hospitals serve. Here’s how it works:
Large corporate hospital systems buy struggling hospitals or independent physician practices, which they then reclassify as hospital-based settings, triggering higher reimbursement. Since they’ve bought their only competition, they’re also able to leverage that increased market dominance to demand even higher rates. Then they bury all this under opaque pricing systems that are impossible for patients to understand.
The results are higher prices without better outcomes. Patients end up paying more for the same care while hospital executives pad their pockets.
Ways & Means Chairman Jason Smith (R-MO) said it best last month when questioning executives: “Hospital consolidation and mergers that lead to ever-growing market power are fueling the borderline extortionary prices. … The pace and scale of mergers have led to market concentration that puts patients at the mercy of hospital empires when hospitals have no competition. It’s no wonder that the sky seems to be the limit for prices.”
Thankfully, members of Congress are starting to see through the tactics that hospital systems use to price-gouge patients.
Let’s be clear: This isn’t about doctors or nurses. This is about greedy CEOs who are using anti-competitive tactics to eat up market share. We know that free markets produce the best outcomes for patients and consumers, while monopolies only lead to higher paychecks for executives.
Hospitals often claim their price hikes are necessary to keep hospitals afloat and that savings will be passed on to their workers and patients, but we have yet to see this take place. Meanwhile, these systems are using your healthcare dollars to sponsor major league sports teams, run Super Bowl ads, build TV and film studios, and give away Chanel purses and luxury beauty products when mom is giving birth.
Despite claims that their hospitals barely stay afloat, all four hospitals behind these real-life examples — Emory Healthcare, NYU Langone, Northwell Health, and NewYork-Presbyterian — don’t pay taxes.
We know the problem. Here are four solutions.
Congress can improve site-of-service reimbursement inconsistencies by requiring site-neutral payments, banning anticompetitive contracting practices, increasing hospital billing transparency, and imposing more program integrity on programs intended to help safety-net providers stretch scarce resources.
Hospitals often point at insurers when costs rise. Insurers welcome transparency. But blaming claims management doesn’t explain the multiyear hospital price growth that consistently outpaces inflation. This is backed up by multiple independent analyses showing that hospital prices, not utilization, are the leading driver of premium growth.
The entities paying the bills have every incentive to keep patients healthy. Preventive care, healthy living, and effective medications reduce hospitalizations — the most expensive setting in healthcare.
Lawmakers took an important step in bringing in hospital CEOs to answer tough questions about their role in making healthcare more affordable. Now it’s time to act.
CORPORATE HOSPITALS ARE DRIVING UP HEALTHCARE COSTS FOR THE REST OF US
If the goal is affordability, hospital pricing and consolidation can’t remain off-limits.
Patients deserve transparency. Taxpayers deserve accountability. And lawmakers deserve straight answers about where the money is going.
Adam L. Buckalew is senior adviser for Hospital Watch and a former senior committee staffer in both the Senate and House of Representatives.
