How current regulations led to the shortcomings of our health care system

If one fact has come out crystal clear from the coronavirus pandemic sweeping the globe, it is the critical importance of the physicians, nurses and nurse practitioners who have been working on the front-lines of this health care problem. Day in and day out, these brave men and women work for the betterment of their fellow man and we applaud them.

Yet over the past few decades, the doctor’s temple, the hospital, has been corrupted by the exploiters of our health care system. Recent news about hospitals firing physicians and cutting salaries during this pandemic merely highlights a critical problem we Americans have long swept under the rug: hospitals’ primary function is no longer to cure the sick, but rather to make money. As a result, massive consolidation of our health care delivery system combined with perversion of current regulatory structure is exacerbating the current coronavirus pandemic.

Related: The ramifications of health care legislation in the age of coronavirus

Certificate of need (CON) laws were created in 1974 as part of the Health Planning Resources Development Act. The purpose of CON legislation was to prevent too many health care facilities from opening in a single geographic area. The idea being that excessive capacity from building too many facilities could result in higher prices due to a lack of demand. Ergo, limit the number of hospitals.

While CON laws might be well intended, there are two key flaws in the way they are applied. First, CON laws set parameters not only governing how many facilities can be built in a geographic market, but also how many ICU beds, ventilators and services may be provided. The fundamental problem with CON laws is that they are based upon locality, a geographic calculation which does not properly take into account other factors, including population density. As the coronavirus pandemic has shown us, population density exacerbates the spread of disease, yet because of these CON laws, hospitals are not adequately prepared to meet demand. The very spacing law used to prevent having “too many” health care facilities has created a lack of beds and resources when a massive volume of care is needed due to the pandemic.

The second major flaw in CON laws is in how they restrict competition. When these regulatory measures were established in 1974, the authors did not take into account the massive hospital system consolidation we’ve seen today. Like the the banking industry, where local banks serving the local needs of the communities have essentially been wiped out by large banks like JP Morgan Chase, Wells Fargo, Bank of America, Citibank, so too, have local hospitals been replaced by large national conglomerates.

The once-private, small-town general practice physician has been absorbed by a practice group. That practice has been replaced by a clinic, and that clinic is now owned by a hospital. In 2012, only 14 percent of physician practices were owned by hospitals. By 2018, a mere six years later, that number was a staggering 68 percent.

Additionally, only one-third of doctors surveyed in the 2018 Survey of America’s Physicians are now private-practice owners or partners, with almost one half (49.1 percent) identifying as a hospital- or medial-group employee.

We must learn our lessons from this pandemic and demand our leaders act.

First, Congress must restructure or completely eliminate the protectionist platform of CON laws. Second, we must prevent further hospital and health care system consolidation by ensuring the Federal Trade Commission (FTC) and the Bureau of Consumer Protection (CBP) forcibly apply existing anti-trust laws.

Mergers increase prices in health care. While the health care conglomerates say it slims administration costs, it really doesn’t. And today, as the conversation around price and access to health care during coronavirus sweep our nation, it is even more important for our leaders to prevent further consolidation until our health care system can recalibrate itself to normative competition and pricing.

Seth Denson is an entrepreneur, author, speaker, political commentator, national media contributor and 2019 BenefitsPRO Broker of the Year finalist.  As a Healthcare Market Analyst, Seth co-founded GDP Advisors – a global consulting firm based in Dallas, Texas.