Wake Up Tri-Counties Phil Kerpen Examines Hospital Consolidation and Rising Health Care Costs

The rising cost of health care was the focus of a recent Wake Up Tri-Counties interview with Phil Kerpen, president of American Commitment and principal of Unleash Prosperity. Host Ken Peel spoke with Kerpen about an article examining the role of hospital consolidation and nonprofit tax-exempt status in driving health care costs. Kerpen said there are multiple factors contributing to rising health care expenses, including insurance companies, government policies, and pharmaceutical costs, but argued that hospital costs deserve greater attention. According to Kerpen, hospital prices have been one of the fastest-rising components of inflation over the past two decades. He said the trend is connected in part to improvements in medical technology and quality of care but also pointed to what he described as a significant decline in competition. Kerpen said large hospital systems have increasingly acquired independent physicians, imaging centers, clinics, and surgical centers. He noted that the share of doctors working for corporate employers has increased substantially over the past 15 years. His argument is that fewer independent providers can mean less competition, fewer choices, and less downward pressure on prices. Another issue discussed was the tax-exempt status of nonprofit hospitals. Kerpen said approximately 80% of hospitals are nonprofits and argued that their tax-exempt status can provide an incentive to acquire additional property and facilities. He also criticized federal reimbursement policies, particularly Medicare policies that can pay more for the same service when a physician practice becomes part of a hospital system. Consolidation Across Health Care The discussion also examined consolidation among insurance companies and pharmacy benefit managers. Kerpen said insurance companies have acquired providers and pharmacy benefit managers, creating situations where an insurer may be involved on multiple sides of a health care transaction. He argued that the broader health care system needs greater competition and transparency, including reforms designed to give consumers more control over health care spending. Kerpen said some consumers may make poor financial decisions, but he said he generally believes individuals can be better stewards of their money when they have direct control over it. Political and Lobbying Challenges The conversation concluded with a discussion of the political challenges surrounding health care reform. Kerpen said hospitals have become major employers in many congressional districts, while the health care industry has developed substantial lobbying influence. He said that political dynamics can make bipartisan reform difficult and pointed to the large amount of money spent lobbying on health care issues. For listeners interested in Kerpen's health care reform proposals, he directed them to MostFavoredPatient.org, a project he said he has been working on with Steve Moore, Steve Forbes, and Tom Phillips.