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Panel, Magazine Blast Hospitals’ High Prices

March 4, 2013
Written by: , Filed in: Practice Management
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Hospitals present “a humongous monopoly problem in health care.” The Federal Trade Commission should continue to challenge hospital mergers, and payments to hospitals should be limited to some multiple, perhaps 125 percent or 150 percent, of what Medicare reimburses.

Must be a bunch of socialists making those statements, right? Or Obamacare bureaucrats. (Or is that the same thing?)

Actually, it was a panel of economists and lawyers Friday at the American Enterprise Institute (AEI), a free markets–oriented think tank that describes itself as “committed to expanding liberty, increasing individual opportunity, and strengthening free enterprise.” The panel discussed “the economic and legal causes of the concentration among health care providers and insurers and its pernicious effect on health costs.” You can see video of the whole discussion here.

The panel came a few days after the publication of a Time magazine report by Steven Brill titled “Bitter Pill: Why Medical Bills Are Killing Us.” Brill looked specifically at nonprofit hospitals, and he contends that they wildly inflate their bills. “The American health care market,” he says, “has transformed tax-exempt ‘nonprofit’ hospitals into the towns’ most profitable businesses and largest employers. … Taken as a whole, these powerful institutions and the bills they churn out dominate the nation’s economy and put demands on taxpayers to a degree unequaled anywhere else on earth.”

Brill suggests several reforms, but he doesn’t seem optimistic about their chances for enactment: “According to the Center for Responsive Politics, the pharmaceutical and health-care-product industries, combined with organizations representing doctors, hospitals, nursing homes, health services and HMOs, have spent $5.36 billion since 1998 on lobbying in Washington. That dwarfs the $1.53 billion spent by the defense and aerospace industries and the $1.3 billion spent by oil and gas interests over the same period.”

The AEI panel blamed hospital consolidation for inflated costs and expressed similar pessimism about the possibility of change. “The basic message, delivered at the pro-markets AEI by prominent economic and legal scholars, is that the hospital market is broken and may not be fixable by the health law or other attempts at reform,” wrote Jay Hancock of Kaiser Health News in his coverage of the event. “They blamed much of the high price of health care on mergers over the past 30 years that have given hospitals ‘oligopoly’ power to charge prices far higher than what would exist with more competition.”

Radiology and medical imaging get only glancing mention in both venues. Brill does conclude, “Over the past few decades, we’ve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course we’ve squeezed everyone outside the system who gets stuck with the bills.”

Bottom line for the individual radiologist: Pressure to cut health care costs will only increase. And it’s not the big institutions that are most vulnerable to that pressure.

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What do New England Journal of Medicine readers think about mammography? The journal polled them to find out. Read about the results on our Facebook page.

Related seminar: The Business of Radiology

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