The Impact of Hospital Consolidation on Rising Health Care Costs: A Call for Reform
The Rising Cost of Health Care: How Hospital Consolidation and the 340B Program are Squeezing Americans
Americans are feeling the pinch of rising health care costs, with out-of-pocket spending increasing by 10.4% in 2021, according to the latest numbers from the Centers for Medicare and Medicaid Services. This surge in costs, coupled with a 6.5% increase in monthly health insurance premiums, is putting a strain on household budgets, especially in the face of rapid inflation.
One factor contributing to the soaring costs of health care is hospital consolidation. When a single health care system becomes dominant in an area, it essentially operates as a monopoly, allowing it to set prices at will. Even the acquisition of smaller clinics by a larger hospital can lead to higher fees for patients, forcing them to either pay more for care or travel further for treatment.
A key driver of hospital consolidation is the 340B Drug Pricing Program, which was established in 1992 and expanded in 2003 with the goal of providing discounted drugs to health care facilities serving low-income and uninsured patients. However, the program has been exploited by some hospitals, who are using the discounts to increase their profits rather than benefitting the intended population.
A study in the New England Journal of Medicine found that hospitals are not required to use their 340B savings to improve care for underserved patients, leading to minimal oversight and little evidence of expanded care or lower mortality rates among low-income patients. This lack of accountability has allowed hospitals to take advantage of the program, driving up health care costs through mergers and acquisitions.
As a result, the 10 largest health care systems in the US now control nearly one-quarter of all hospitals, with hospital income on the rise. While hospital conglomerates profit from the 340B program, the neediest patients see no benefit, and consolidation continues to drive up health care spending.
The only solution to this issue is for Congress to revise the 340B program, implementing safeguards that ensure the discounts are used to benefit low-income patients as intended. This could include limiting program access to facilities serving low-income populations and requiring hospitals to demonstrate how they are using the discounts to support these patients.
Until lawmakers take action to reform the 340B program, Americans will continue to feel the squeeze of rising health care costs. It is crucial that steps are taken to address the loopholes in the program and ensure that it fulfills its original purpose of providing affordable medication to those in need.