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In some parts of America, it can take up to 34 minutes to drive to the nearest hospital. With more than 100 rural hospitals having shuttered since 2010, that problem is only getting worse.
Fewer hospitals mean a lack of competition and, as a result, higher prices for patients. There's not a single cause for the decreasing level of competition among hospitals—particularly in rural areas—but experts point to a combination of factors, including a rise in hospital mergers and government regulations that protect large hospitals from competition.
The rise of regional hospital monopolies is "the most important driver of higher prices for hospital care," writes Avik Roy, conservative health care scholar and founder of the Foundation for Research on Equal Opportunity. Those monopolies have allowed hospitals to "persuade the government to give them financial and regulatory advantages over competitors and taxpayers," Roy writes.
Some of those advantages include Certificate of Need (CON) laws, which require potential new providers to prove that there is a "need" for a new provider in an area that already has a hospital. In practice, these regulations, fervently supported by established hospitals, help protect the monopoly power (and high profits) of large hospitals, and raise prices for patients. Another regulation that has helped exacerbate hospital market consolidation is the Affordable Care Act's ban on new physician-owned hospitals, smaller competitors of large hospitals.
Banks' Hospital Competition Act seeks to bring down the cost of health care by improving competition in the world of health care providers. Banks' bill would incentivize states to repeal CON laws—as 15 states already have—and repeal the ban on new physician-owned hospitals. The bill also includes other provisions to lower costs through competition, such as requiring hospitals to share the costs of their 100 most frequently performed procedures and quadrupling Federal Trade Commission staff on hospital consolidation issues.
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