Health Care Costs

As the nation struggles with how to pay for health care costs that are spiraling at an annual rate of 17%, five times the rate of inflation, we are virtually ignoring the reasons behind the escalating costs in the first place. We are engrossed in payment methods rather than cost containment, all while the industry seeks innovative ways of taking home a bigger piece of the national pie. Some see the "free-market" as our savior, when in fact, the slow conversion to a free market system that began a decade ago is the reason we are in trouble today. And it will get worse.

Years ago it was considered fraudulent for hospitals to hire their own physicians, for physicians to own an interest in a hospital to which they referred patients, and for physicians to refer patients to an outside laboratory in which they had a financial interest. We also had a certificate of need program that prohibited hospitals from leap-frogging the hospital down the street, thus churning expensive high-tech imaging systems.

morThanks to $100 million in annual campaign contributions from the health care industry to politicians, all of these cost-containment rules that protected the system from excesses have been eliminated, and the ensuing free-for-all began and thrives today. But this maneuvering also promises to backfire and become the undoing of a once-proud medical profession.

The only competition that resulted is between hospitals and clinics as physicians move expensive and profitable testing into their clinics. Hospitals that once used time-shared mobile MRI services -- and then bought their own in-house system because volumes justified it -- are now finding their local clinics adding the mobile MRI service and leaving them without patient volumes to pay for their system. In the meantime patient testing volumes are increasing in the clinic because of the added profit incentives.

Is anybody watching the growth of these cash cows? Are we totally blinded by the conflicts of interest that a free-market system demands?