A DOGE Approach Is needed in Healthcare Beginning with Hospitals
TownHall.com Opinion by Hal Scherz, MD
Summary Points:
- Hospitals have shifted from patient-centered facilities to powerful, profit-driven corporate entities, often prioritizing financial incentives over care while driving up healthcare costs.
- The system is heavily distorted by administrative bloat, higher hospital-based pricing (2–3× for the same services), and regulatory advantages that suppress competition and inflate costs for patients.
- The proposed “DOGE approach” calls for reducing hospital dominance, restoring competition, and implementing site-neutral payments, so care is priced the same regardless of location and physicians regain independence.
Hospitals were once merely facilities where doctors could bring their patients who were sick or who needed surgery. This was when doctors were self-employed in solo or group practices. Hospitals have shifted from centers devoted to patient care to profit-driven corporate entities to the detriment of patients medically and financially.
Hospitals have become power brokers in healthcare. The transition has been multifactorial. Medicine has become more complicated over the past 6 decades. The business of running a medical practice has become more complex due to regulatory burdens, declining physician reimbursement, and administrative challenges. Many doctors have ceded these functions to outside entities, and hospitals have stepped in to fill these roles.
Hospitals do not treat patients – doctors do. However, as businesses, hospitals increasingly prioritize financial incentives over patient care. Moreover, they operate with little accountability and have become a primary driver of skyrocketing healthcare costs.
Many factors have allowed hospitals to predominate in healthcare. Still, these would be the most important ones: hospitals are paid more for services in their facilities compared with identical ones performed in outside facilities, tax-exempt status, Affordable Care Act restrictions on physician-owned competing entities, lax enforcement of corporate practice of medicine statutes and anti-trust regulations, and certificate of need laws.
Hospitals are bloated with administrators who contribute nothing to the health or well-being of patients. According to Athena Health, since 1970, the number of physicians has increased by 200%, roughly proportional to population growth. During this same period, the number of hospital administrators has soared over 3800%. In Leopold et al. 2018 study, these administrators account for 30% of healthcare spending. There are over 10 administrators for every doctor. Between 1965 and 2014, the wage gap between healthcare CEOs and orthopedic surgeons (who are at the high end of the clinical pay scale) increased from 3:1 to 5:1. During that same time, the differential between CEO pay and pediatrician compensation went from 7:1 to 12:1. CEO pay does not correlate with quality of care, financial performance of the institution, clinical outcomes or measures of community benefit. Compensation for other hospital administrators is just as disproportionate. Hospital administrators are a financial burden to the system.
Read the rest of the Editorial in TownHall HERE.
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