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Prior to the Hill Burton Act of 1946, many if not most of the hospitals in the U.S. were owned by the physicians who worked in them.  Passage of this legislation created what we now think of as a community hospital.  These new government hospitals brought to life all sorts of typical government baggage, including, not surprisingly, inefficiencies and higher costs.  The appearance of these “community” hospitals also brought to health care an additional profit-seeker, one that was now unhinged from the physician’s control.  I mean by this that the physician, no longer in control of the facility, was powerless to financially intervene on behalf of their patient when subjected to bills from these new hospitals.  Think of this as the birth of the medical industrial complex.

Always greedy for more and more money, like any other government enterprise, and conjuring every excuse imaginable to get it, these hospitals were given the ultimate gift:  Medicare and Medicaid.  The creation of these entitlement programs put the taxpayers, rather than the patient,  on the hook for the payment of hospital bills.  It should go without saying that the hospitals much preferred collecting from the taxpayers than directly from the patients.  Vicious price inflation in medical care was off to a good start.

Fast forward to today.  Many health insurance policies now cost so much, that for many, the risk/benefit proposition of having this coverage makes no sense.  This decision by many people to avoid the purchase of health insurance is a beautiful example of the market at work.  These uninsured folks show up at the hospitals, though, sometimes with colds and sore throats, sometimes with brain tumors.  That the insurance companies have priced themselves out of the market has now left their cartel pals, the big hospitals with some patients who are not able to pay.  Not satisfied with the reimbursement from the uncompensated care scam they had previously arranged, the hospitals and insurance companies got together with their old pals in D.C. and came up with a solution:  make everyone buy insurance for themselves and make everyone buy Medicaid for those who can’t afford to buy insurance.  This move is not to help with access to health care.  This move, just like the immediate post-Hill Burton history, was made to line the pockets of the corporate health care players, the hospitals and insurance companies.  Unsatisfied with the success of their bankrupting collection practices with individual patients, they have once again successfully lobbied to transfer the burden of the bills they create to the taxpayers.  This is history repeating itself.

One of the great ironies of Obamacare is the clause that prevents the expansion of or new construction of physician-owned hospitals.  Crushing this trend was key to keeping this “pre-Hill Burton” medical model, one characterized by higher quality and lower prices, from getting too many people’s attention.  The facility-owning physicians in this country, particularly those of us embracing and promoting price transparency, hope to bring the market back to health care, producing true health care reform that will benefit patients, not the corporate cronies for whom this legislation was written.

G. Keith Smith, M.D.