‘Nonprofit’ hospital monopolies

Greg Rosalsky

There’s a lot of profit to be made in the nonprofit hospital business these days, said Greg Rosalsky. The largest chunk of America’s health-care spending goes to hospitals, which account for 6 percent of the country’s entire economic output. In many cities, the hospital system is the largest employer. Hospitals are “a really important part of the American economy. Not just in terms of health and well-being, but in terms of dollars and cents.” But thanks to the quirks of the law, while in many American metro areas medical care is concentrated in just a few hospital systems, regulators “are hamstrung in investigating nonprofit hospitals for anti-competitive conduct.” Just last

month, Michigan’s two largest hospital systems announced they wanted to merge, creating a health-care conglomerate spanning 22 hospitals, 305 outpatient facilities, and an insurance company. Hospitals have been gobbling up physician practices, too, giving them “vertical integration” that chokes off competition. With so little competition, hospitals can easily raise patient prices. But they’re nonprofits operating in the public good, right? Well, sort of. In reality, while these giant hospital systems don’t have “profits” that are distributed to shareholders, they “take the extra money they make and use it for executive compensation and buying shiny stuff.”