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In the fight for lower health care prices, where are hospitals?

By Adina Marx,

09.29.2022

When people need to see a doctor, the only thing on their minds should be getting the help they need, not worrying about how much a trip to the hospital might cost. Hospital pricing is out of control, and the reasons for that lie in what hospitals are incentivized, or paid, to do. These incentives are one large part of what has made our health care system worse for patients and their loved ones.

We’ve talked a bit before about how our complicated health care system is leading to higher costs and worse outcomes than in other countries. One part of that system is hospitals. Families USA just released our second People First Care paper, Bleeding Americans Dry: The Role of Big Hospital Corporations in Driving Our Nation’s Health Care Affordability and Quality Crisis. Our People First Care series goes in-depth rethinking how we deliver care so patients’ health is the focus, not the endless flow of bills. So what part do hospitals play in this system?

Breaking it down to brass tacks, we pay hospitals to provide services. So what are they incentivized to do in order to get paid? Provide as many services as possible, and also charge as much as possible for those services. And how can they ensure they are the ones providing the services and setting the prices? Well, one way to do that is to get rid of the competition, so there’s no other hospital in the area who can provide a better service or set a better price. And that’s exactly what they’re doing, playing Monopoly with our health.

The “fee-for-service” model, the payment structure that makes us pay for how many services are done (and not how healthy we are), is incentivizing large health corporations to merge hospitals, in order to get a larger share of patients to charge. In the last seven years, hospital prices have grown four times faster than people’s paychecks. Many of these health systems charging these exorbitant prices are nonprofits. The nonprofit status is granted by the government to allow hospitals to provide more services to the community and in return they pay lower taxes. . But instead of fulfilling that goal, more than 80% of these systems spent less on charity care than they would have spent on taxes. In 2019, across the health care sector, that difference in money was $18 billion- $18 billion dollars that should have been either charity care or paid in taxes. And some of that money has been going straight the executives of these hospitals. In 2018 eight of the 10 highest-paid CEOs of nonprofits were from large health care corporations. Those salaries are even higher in the for-profit sector.

While our hard-earned dollars pad executives’ expensive salaries, it’s not making us any healthier. It may not sound true, but we have the highest infant mortality rate and among the highest maternal mortality rates compared to other industrialized countries, and those rates are even worse for people of color. Huge hospital corporations are making a lot of money but our health is often worse. “Health Care Acquired Infections,” or infections that patients catch in the process of seeking care for something else, are one of the top 10 causes of death in this country. Our hospitals have become so focused on dollars that they’re undermining our best interests as patients.

This is only scratching the surface of these abusive company practices. When we’re worried about our or our loved ones’ health, getting better should be the only thing on our minds. But because of the predatory practices of the businesses running our hospitals, a full third of Americans are now either rationing their care or are forgoing care all together. That, more than anything, is a sign our system is broken. It’s time for some real change. We need person-centered, not profit-centered, care, focused on what’s best for us, not for big corporations. If you or a loved one have experience dealing with exploitative hospital bills, share your story with us here.