Policies such as certificate-of-need laws, payment differentials between care settings, restrictions on physician-owned hospitals, Medicaid financing gimmicks, and broad subsidies have driven hospital prices far above inflation, encouraged hospitals to acquire physician practices and merge into large health systems, and weakened consumer pressure on costs. Despite claims of financial strain, the … many hospitals maintain solid margins, investment income, and reserves while spending heavily on administration and other non-patient-care costs. The result is a costly, distorted market that burdens patients, employers, and taxpayers with high and unpredictable prices. To restore competition and improve efficiency, [we need] reforms such as site-neutral payment, stronger price transparency and subsidy oversight, repeal of anticompetitive rules, targeted charity-care standards, and restructuring hospital support programs to reward quality, efficiency, and genuine need.
Source: John Graham, Paragon Institute