COVID precautions were relaxed, so I (RWD) finally drove to a nearby California town for an in-person CME conference. I parked my car and scanned the street for a cafe. I rushed inside to order, but suddenly froze. The overhead menu listed a 16 oz coffee for $6. I walked out, walked to the block and bought a delicious 16 oz coffee for $2.75.
To what extent is it possible for our patients to do the same? They are rarely informed in advance of the cost of an emergency visit. They are captive customers once they walk into the emergency department, they are just coming for care, but they should be able to compare prices for care in the emergency department. This, however, is nearly impossible. Retail or so-called service catalog prices are not displayed in the ED or easily obtained on the Internet. Try asking for ED enrollment, and you’ll often be greeted with a puzzled face.
Why are the prices not displayed like in a supermarket? Because there is no need. Hospitals have little competition because too many of them have formed regional monopolies. Federal law requires hospitals to post prices on the web, but a recent NBC study found less than 6% do so. (June 8, 2022; https://bityl.co/E43h.) Even when displayed, it can be coded in chargemaster lingo which is too confusing for most patients or even us ER doctors.
The evils of monopolies and the resulting excessive prices, poor quality and lack of choice were recognized over 130 years ago. The Sherman Act banned attempts to monopolize a market in 1890, and President Theodore Roosevelt used the full force of the federal government to break monopolies. The Clayton Antitrust Act prohibited active mergers and acquisitions that reduced competition in 1914.
Until the end of the 20e century. Then hospital mergers, acquisitions, and consolidations began around the time emergency medicine became a board-certified specialty, and these were followed by contract management groups. forming regional monopolies on the supply of PE.
Hospital consolidation has ended competition and choice in health care through monopolies. (Derlet, Robert W. Societing American Health Care: How We Lost Our Health System. Johns Hopkins University Press: Baltimore, 2021.) Cities that had 10 independent competing hospitals can now have one system monopolizing health care there and elsewhere. Examples abound: HCA controls 184 hospitals, CommonSpirit 140, Ascension 143 and Community Health Systems 83, to name a few of the many mega-systems. (HCA Health. https://bit.ly/3Q5JkE9; CommonSpirit Health. https://bit.ly/3cA1JeD; Ascent. https://bit.ly/3Ay2mNV; Community health systems. https://bit.ly/3wIsPay.)
The locally controlled community hospital is a thing of the past. The University of Pittsburgh Medical Center holds a virtual monopoly in a city of two million people, with 40 hospitals and more than 8,000 beds. (UPMC. https://upmc.me/3pV9cbp.) Many hospital systems have created pricing monopolies through mergers and acquisitions that violate federal antitrust laws.
The recoil was weak. Sutter Health in California was sued in 2019 by then-Attorney General Xavier Becerra for uncompetitive awards. This action resulted in a landmark $575 million settlement to resolve anti-competitive business practices charges against consumers and employers, a landmark court case against the hospital industry. (California Attorney General’s Office. March 9, 2021; https://bityl.co/E447.)
A 2022 New Jersey court ruling blocked the purchase of Englewood Health by Hackensack Meridian Health. (Northjersey.com. March 22, 2022; https://bityl.co/E449.) But these small interventions in a vast sea of corporate health care monopolies do little to help our patients or our PE colleagues.
Monopolies in hospital emergency departments cause economic hardship for patients as well as for their employers, who pay part of their health insurance premiums. Individual annual deductibles exceed $8,000 for many people, and insurers often refuse to cover certain emergency department costs (e.g., MRIs), so a visit to an emergency department can result in the bankruptcy of a family. Too many PEs are also beholden to mega CMGs, often owned by private equity or Wall Street shareholders.
Kaiser Health News recently reported that a Tennessee man who needed six sutures to repair a laceration in his leg was billed $4,582 by the Southern Tennessee Regional Health System-Pulaski, a regional monopoly owned by LifePoint which operates 63 hospitals. . (19 Nov 2021; https://bityl.co/E45R.) What choice did he have? Imagine that all the cafes in a city had the same owner who charged exorbitant prices. You may be able to forego the coffee, but can you forego treatment for an emergency medical condition?
Hospitals arbitrarily set their rates for emergency services. They can charge whatever they want, although contracts with some insurance plans may lower their charges and designate them as an in-network facility. Too many of these hospitals operate under a monopolistic business model and in some cases are the only hospital in town. Patients can be charged thousands of dollars even for simple emergency room visits.
Of greater concern are patients with common complaints such as chest or abdominal pain who can be charged $10,000 to $30,000 even if no serious cause for the symptoms is found. (J Med Urgent. 2022;62: 675.) We have seen reports of hospitals surcharging because a special designation, such as a trauma center, provides them with the justification to add an additional $50,000 to an emergency service bill.
CMGs contract with hospitals to hire and provide EPs to work in their respective DUs. The largest control more than 50% of EPs and include Envision, TeamHealth, SCP Health (formerly Schumacher) and US Acute Care Solutions. TeamHealth is owned by Blackstone, a large private equity group, while Envision and SCP are owned by private equity giants KKR & Co., Inc. and the Onex Group respectively.
These regional Wall Street monopolies charge and collect professional fees, and keep a large slice of the pie for profits and administrative salaries. If a PE has a problem with a big CMG, they can’t just quit and get a job at another nearby DU. Chances are the CMG has a contract with every other hospital emergency department in town, especially if they’re owned by the same company.
Too many physicians feel muzzled and prevented from talking about patient safety issues for fear of being fired by the CMG. EPs who are laid off may not even be able to get a job in a nearby city or even in the same state if their CMG holds all of the regional ED hospital contracts. The president of the American Academy of Emergency Medicine recently wrote that he was fired by a CMG, presumably to replace him with cheaper non-medical providers. (Common Sens. July/August 2022; https://bityl.co/E45y.)
As ER Medical Director, I (MB) fought for policies and procedures that were in the best interest of my patients. My objections to harmful policies within the hospital, a regional monopoly, sparked outrage from the CMG that employed me. The regional director has acknowledged that poor patient care needs to be addressed, but has repeatedly stated that “maintaining contracts must be our number one priority”. CMG could lose its contract, and it only cared about profit, not ED patients. I was told that I had to give up my reform efforts or be fired!
This CMG had a monopoly on physician staffing in my area, and I was unlikely to get an equivalent job within commuting distance of my home. Fighting for the best care for my patients cost me my job, but I would do the same again. The regional manager agreed that I had to shut up or be kicked out. Unfortunately, “contract keeping” has become the top priority for too many CMGs.
Congress must step in to prevent the abuses of health monopolies by first including health care under the Sherman and Clayton Acts, which were passed to prevent the many ills of monopolies. The cottage industry of thousands of individual hospitals and independent doctors of the recent past has now turned into a corporate monolith, which wants to enjoy monopoly power and profit but not be subject to the law.
Emergency services, an essential public service, should have tariffs regulated as a public service. It’s not a new concept; Medicare sets the maximum prices a hospital emergency department can charge, and many European countries also regulate emergency department prices. Congress must also provide frontline EPs with protection against CMGs by outlawing monopoly control of towns and cities, requiring due process before termination, eliminating non-competition contracts, and opening the books on physician billing and collections.
We encourage our fellow EPs to describe their experience with monopoly hospitals and CMGs to the media and to write to their state and federal legislators. We EPs must also bring the issue to the top of the list with our professional emergency medicine organizations and local and national medical societies.
Dr. Derletis professor and chief emeritus of emergency medicine at the University of California, Davis. He founded the EM residency training program there and is the author of the book the corporatization of American health care; How we lost our healthcare system. Dr. Bordenis an emergency physician in Washington State and author of the book Medical wisdom.