Health care improves through competition

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An article in the April 16 issue takes the position that increasing health care capacity increases health care costs. This argument has been around since the 1970s, when many of us were playing with Tonka trucks in the back yard. I admit the assumption has visceral appeal. It makes sense that if hospitals build more capacity, then costs associated with that expansion have to be made up by charging more or doing unnecessary care.

Turns out this is untrue. This assertion prompted certificate of need laws in 1974 that were repealed in 1986. Empirical studies found that restricting health care capacity may actually increase costs. When existing hospital systems choose not to compete in an area occupied by another hospital it restricts choice and competition, which drives up cost.

The capacity-increases-costs argument recently has been used to outlaw competition from physician-owned hospitals. Empirical data shows physician-owned facilities are quality leaders here in Indiana and throughout the country. Competition makes us better doctors and better hospitals. We really don’t need to go back and retest the assumptions from nearly 40 years ago. I still have my Tonka truck, too, but that doesn’t mean I drive it to work.


Dr. John Dietz

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