American health care is dominated by large hospital-driven health systems. They operate as monopolies or oligopolies in almost every market. They have jacked prices up by enormous amounts every year. They employ excessive administrative staff and pay executives ridiculous compensation, although most are supposedly non-profits. An article at the Kaiser Family Foundation describes how bad pricing is for a complex, but very routine, procedure–a knee replacement. The teams that do these are very experienced and can do the entire procedure quickly and patients are typically sent home the same day. One health system in North Carolina was charging $16,000. A short distance away, in Asheville, where one system dominates, the price is $40,000. Now theoretically, if you are bigger and have more volume, there should be some scale advantages that lower costs, but being a monopolist eliminates the likelihood that patients will benefit.
Several other examples are given in the article. When these health systems charge more, it flows through to higher health insurance premiums. The lying hospitals claim that the mergers will lower costs and improve quality, but neither has occurred; in fact prices have soared while quality is at best the same. Hospital prices are rising far faster than general inflation, in fact are the fastest growing prices for any product or service. The solution is obvious and I have promoted it for years–break up these systems, both horizontally and vertically. Make them divest everything and return these markets to a competitive situation. (KFF Article)
