[rexroad]

For-profit structure is part of the problem but not all of it. Issue 3 analyzed 3,193 hospitals using CMS HCRIS FY2023 cost reports. For-profit hospitals do have the highest cost-to-charge markups: 4.11x median. But nonprofits are 2.46x, and nonprofits hold 75.5% of total national hospital supply spend. The ownership form does not reliably determine pricing behavior when market conditions are the same: opaque prices, patients who cannot shop, no reference price to anchor negotiation.

Maryland has had all-payer hospital rate-setting since 1977 with a largely nonprofit hospital sector. It produces significantly better cost control than the national average. The structural fix for hospital pricing (commercial reference pricing at 200% of Medicare) works regardless of tax status because it creates a known floor price. That is what the RAND data and the Montana Medicaid experience both show. The mechanism matters more than the ownership form.

[SlightlyLeftPad]

I’m willing to agree on some points however, the for-profit model is what incentivizes the convolution in the first place. It has been the main driver for injecting complexity at every level. In turn, even nonprofits have to spend capital to make sense of it.

In other words, it does measurable harm to the entire industry and builds the moat wider in favor of the for-profits and shrinks the margins of the nonprofits trying to compete.