Viewpoint: Reducing healthcare costs in Indiana starts with this bill

A proposed bill in Indiana would confront the monopolization of hospitals in the state and restore competitive prices in healthcare, Michael Hicks, PhD, said in a Feb. 7 op-ed in the Daily Journal.

Dr. Hicks is director of the Center for Business and Economic Research and the George and Frances Ball Distinguished Professor of Economics in the Miller College of Business at Muncie, Ind.-based Ball State University. He said Indiana's hospital industry is "among the most monopolized" in the nation, and as a result, patients in the state are paying more for common procedures. For instance, 97 percent of outpatient visits to the six largest hospital systems in the state are charged at rates above the national average. A recent study Dr. Hicks cited said hospital system mergers led to price increases of almost 20 percent for residents.

Dr. Hicks described Indiana's six largest hospital systems as "conglomerates" rather than hospital systems. 

"They are in fact, diverse conglomerates that have acquired so many physician practices, clinics and outpatient services that no new hospital system can enter the market," Dr. Hicks wrote. "In the jargon of antitrust economics, it is one of the most extensive examples of 'vertical integration' since the Gilded Age monopolies."

The bill, HB1004, would have two key effects, Dr. Hicks said. First, it would make it harder for hospital monopolies to prevent competitions and end noncompete clauses. Second, it would create a tax incentive for new healthcare providers and stop hospitals from dictating medical care guidelines to physicians.

HB1004 would set benchmarks at the average national price for all procedures, and hospitals that charge more than that would be penalized, Dr. Hicks said. 

"There's no perfect solution to the problem of hospital monopolies," Dr. Hicks wrote. "It took more than a decade for this problem to clobber us, and the Legislature has been working hard for several years to come up with this solution. Other states have wrestled with these monopolies. Some used the courts, others used single-payer systems. Indiana's plan is the best, most market-friendly plan I've seen."

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