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You thought you could attract custom by charging patients and private insurance companies more fairly, but you just never counted on how much money would have to go to administrators, lawyers, actuaries, and other bureaucrats just to make sure that you were fully in compliance with all the reams and reams of government regulations your hospital had to conform to

Starting thirty years ago I have been told more than once, if the government is involved it costs 3 times more.

https://mises.org/wire/government-regulated-healthcare-there-no-competition-no-competition

Antony Sammeroff

Imagine you are a young, idealistic doctor. After some years in clinical practice at a private hospital you tire of the fact that more of your time is spent filling out forms and attending staff meeting than with your patients. You went to medical school all bright eyed with the dream of making a good living making a difference. You ran the gauntlet during your residency, sometimes working ninety-hour weeks, skipping meals and even showers so you would have more free time to study, because you believed in the end it would all be worth it.

In some ways it is, there are times you love your job—but you are also disillusioned by the fact that you barely get time to really know your patients and give them the quality of care you think could really help them thrive. Speaking to some of your former classmates you notice you’re not the only one feeling the way. You meet a few other idealists at continuing medical education conferences and together, you decide you want to branch out together and create your own little hospital, employing staff that agree with your ethos and want to offer the quality of care that patients deserve. You dream that perhaps your little project with serve as a model to the world of how healthcare can be done, and people will start copying it.

After taking some months off work to plan your little benevolent social enterprise, you and your cofounders discover that opening a new hospital is harder than you thought it would be. For one thing, you find out that in your state (as in most states) if you want to open a hospital you are obligated to obtain a “certificate of need” from the government to open a hospital. You have to present yourself before an official board and prove that your community “needs” another hospital, and that you are willing and able to fund it all by yourself.

As if that wasn’t bad enough—the people on the board include senior administrators from already existing hospitals in the area, and they want the competition from you about as much as a gunshot to the head! You think to yourself: “Imagine I wanted to open up a café, but I needed permission from the local Starbucks and Tim Horton’s!”

In addition to that, Obamacare, passed in 2010, prevents government payments to any hospitals owned by doctors! This puts you at another unfair advantage compared to the existing commercial hospitals in your area who are taking Medicare and Medicaid patients. You are willing to persist though, because you’re an idealist, and you’re starting to think it might not be too great taking government money anyway as this often leads to overtreatment, corruption, and strings attached.

You had the great idea of training your own assistant-technicians on the site to take runaway tasks off the hands of your physicians and save patients money. You soon discovered that you weren’t allowed to train anyone to do anything unless they were fully licensed and qualified to do it at college already—even if these little tasks would only really take a few weeks or months of training.

So there goes your idea of avoiding excessive staff meetings and form filling. You and your specialized colleagues (who also must run the damn hospital) want to tend to severe cases that you were highly trained for. But you are forced to spend lots of time attending to patients with relatively trivial complaints, because no one else is allowed to do it. (See the chapter Getting Schooled for full details.)

You dreamed of offering mentorship programs to college graduates, thinking employing young doctors would keep staff costs down for patients and help graduates get a good start, but because there are so few medical schools due to government restrictions on building them, you found it extremely hard to compete with more commercial hospitals when it came to recruiting new talent. And because medical education is so expensive, and all these graduates were six figures in debt, they expected to be paid handsomely from the off so they could get their finances back in the black as quickly as possible.

You thought you could attract custom by charging patients and private insurance companies more fairly, but you just never counted on how much money would have to go to administrators, lawyers, actuaries, and other bureaucrats just to make sure that you were fully in compliance with all the reams and reams of government regulations your hospital had to conform to. From what you could tell, the vast majority of these did less than nothing to protect patients or improve the quality of care they received.

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