Large hospital–based health systems are the largest factor by far, in excessive health spending growth, even more than the drug companies, although they also play a role. A new Kaiser Family Foundation brief provides more ammunition for a serious crackdown on abusive hospital practices–forced divestiture of hospitals, physician practices, etc.; forced reductions in administrative staff and executive compensation and other measures to make them more efficient and less expensive. Between 2022 and 2024, hospitals accounted for 40% of health spending growth, far more than any other category. The next highest category was physician and clinical services, at 22%, followed by prescription drugs at 11%.
I would note that this understates the contribution of hospitals, which generally own these huge systems which include almost every kind of health care provider. They own those physician practices, nursing facilities, labs, pharmacies, home health agencies, surgi-centers and so on. And other research has shown that these hospital systems charge much higher prices for the services provided by these other providers types that they own. Much of the spending growth was driven by higher prices and some by more utilization of hospital services. We won’t solve the health spending issue until we completely reform hospital administration and care. (KFF Brief)
