Healthcare giants have been shielded from competition for too long, and it's time to level the playing field. For decades, federal and state policies have inadvertently favored the expansion of large health systems while stifling the emergence of new competitors. But here's where it gets controversial: many of these policies, though well-intentioned, now serve to protect dominant players rather than foster a competitive, patient-centric healthcare environment.
Payment structures, for instance, often reward consolidation through complex regulatory frameworks that disadvantage independent providers. Licensing laws can delay or even prevent new facilities from opening, and the Affordable Care Act outright banned the creation or expansion of an entire category of physician-owned hospitals. And this is the part most people miss: these barriers don't just limit competition—they drive up costs and reduce patient choice.
To truly reform healthcare, we need to refocus on the patient-doctor relationship and empower models that prioritize their needs. Here are four critical reforms that demand immediate attention:
1. Implement Site-Neutral Payments
Did you know that the same medical procedure can cost over 2.5 times more when performed in a hospital-owned clinic versus a physician's office? This disparity exists because Medicare and private insurers often pay drastically different rates based on the location of care, not the quality or complexity of the service. Originally justified by minor differences in overhead, this system has become an incentive for hospitals to acquire independent practices and reclassify routine care as more expensive hospital-based services. The Medicare Payment Advisory Commission has repeatedly called for aligning payments across settings to eliminate these distortions. Site-neutral payments would discourage unnecessary acquisitions and encourage the growth of independent practices, ensuring that identical care is reimbursed equally, regardless of where it’s provided.
2. Repeal Certificate-of-Need (CON) Laws
CON laws, established in the 1960s to prevent duplicative services, now primarily serve as barriers to entry for new providers. In states with these laws, opening a new hospital, expanding an existing one, or even purchasing major medical equipment requires lengthy regulatory approval—a process that incumbent health systems can exploit to block competition. Research consistently shows that CON laws are associated with fewer hospitals, fewer ambulatory surgery centers, and often higher prices. The Federal Trade Commission and the Department of Justice have urged states to reconsider these laws, arguing they suppress competition rather than promote it. Eliminating CON laws would allow markets to function more efficiently, driving down costs and improving access.
3. Unlock the Potential of Ambulatory Surgery Centers
Ambulatory surgery centers (ASCs) demonstrate the value lost when entry barriers protect established systems. Many surgical procedures can be safely performed in ASCs or office-based settings at a fraction of the cost of hospital operating rooms, with comparable outcomes. Yet, in states like Massachusetts, regulatory hurdles—often tied to CON programs—delay or prevent the establishment of new ASCs. As a result, many procedures that could be done in lower-cost settings are instead performed in more expensive hospital facilities. Expanding access to ASCs wouldn’t replace full-service hospitals but would allow routine surgical care to shift to more efficient, patient-friendly environments.
4. Reopen the Door to Physician-Owned Hospitals
The Affordable Care Act effectively halted the creation and expansion of physician-owned hospitals, citing concerns about patient cherry-picking. However, subsequent research has largely debunked this notion, and some studies suggest that Medicare spending may be lower at certain physician-owned facilities compared to traditional hospitals. Physician-owned hospitals offer an alternative ownership model—often smaller, more specialized, and directly accountable to clinicians. In markets dominated by large health systems, prohibiting these hospitals eliminates a valuable source of competition. While safeguards are needed to prevent patient selection, blanket restrictions are not supported by evidence. Allowing physician-owned hospitals to compete could enhance affordability and access without compromising quality.
Here’s the bottom line: If policymakers adopt site-neutral payments, repeal CON laws, allow physician-owned hospitals to compete, and remove barriers for ASCs, we could see significant improvements in healthcare competition. Prices would drop, quality would likely rise, and patients would have more choices. But this raises a provocative question: Are we willing to challenge the status quo and prioritize patients over profits? What do you think? Let’s continue this conversation in the comments.
