Hospitals & The Free Market

Published February 5, 2005

Dear Editor:

The Op-Ed column “A health-care loophole” (Thursday), by Charles N. Kahn III, president of the Federation of American Hospitals, was misleading at best and untrue at worst.

Leaving aside the obvious irony of the head of an association of for-profit hospitals criticizing the profit motive of specialty hospitals, and even looking beyond his slander of the medical profession in accusing specialty hospitals of “cherry picking” the most profitable patients, the fact is that Mr. Kahn does not give an even mildly accurate picture of specialty hospitals.

Mr. Kahn neglects to mention that the overwhelming majority of doctors at specialty hospitals have no ownership stake and nearly all of the few who do have such a stake own less than 6 percent. These facts are documented by the Government Accountability Office, so prominently featured in Mr. Kahn’s attack against competition and doctors.

His charge that there is no evidence of higher quality at specialty hospitals is also false. The Lewin Group, a well-respected health consulting firm, found significantly better quality at the specialty heart hospitals it studied.

The most troubling statement by Mr. Kahn is his claim to support “free-market-oriented health policy.” Free markets, the last time I checked, don’t include having the government shut down your competition because it is taking away market share or eating into your profits.

Full-service hospitals do face a number of challenges, some entirely of their own making — such as bizarre pricing practices that hit the poor and uninsured with the highest bills — and some foisted on them by government programs that shortchange hospitals. I suggest that Mr. Kahn focus on those problems rather than trying to shut down his competition.

Sean Parnell
The Heartland Institute
Chicago, Illinois

Sean Parnell ([email protected]) is vice president of external affairs at The Heartland Institute. He is also the author of a recent three-part series on specialty surgical hospitals that was published in Health Care News.