The Real Reason For Hospital Shortages In The United States

An article published by the Kaiser Family Foundation on Wednesday showed the United States ranked eleventh in the world in per capita distribution of hospitals.  That article pointed out that the United States had a “lower hospital density than almost all comparable countries.”

Predictably, there are a slew of other hospital-related resources in which the United States is lacking, including the number of hospital-employed nurses and the number of physicians.  Although the Kaiser article does not detail the cause of these shortages, I do so in my new book, The Case for Free Market Healthcare.

The reason is actually quite simple and predictable: government intervention.

Although the details of the dynamics are too extensive to cover in this forum (I therefore urge you to explore them further in The Case for Free Market Healthcare), there are a few observations that can be gleaned regarding the degree of error with which we have approached healthcare delivery in our country.

First, government has been openly hostile to hospitals, particularly private hospitals, viewing them mostly as vehicles for greedy investors to make money off the sick and the poor.  This hostile and destructive attitude led to the passage of the Health Planning Resources Development Act in 1974 that actually rewarded states for implementing “certificate of need” (CON) programs to restrict the abilities of entrepreneurs to build hospitals.

Within a few years, forty-nine states enacted CON laws, and their models for governmental interference have since been shown not to lower prices for inpatient services and not improve hospital financial investment in communities as had been touted by the bill’s advocates.

But the damage still persists. To this day, despite the certificate of need program’s total failure, only thirteen states have rescinded it demonstrating the difficulty of undoing misguided legislation after it has been passed.

Government also has and continues to manipulate the market in ways that have destroyed projects aimed at improving the availability of hospital emergency rooms.  In 2018, the Medicare Payment Advisory Board advised Congress to cut reimbursements to freestanding emergency rooms operating within 6 miles of their parent hospitals by 30%.  Why? Because, according to MedPAC, “such systems would encourage providers to treat lower intensity rooms rather than urgent care centers.” Which begs the question: what business is it of Medicare, an insurance company for seniors and the disabled, where the market decides that it is more efficient to treat urgent and emergent patients?

As a result of MedPAC’s misguided market manipulations, over 250 shovel-ready or unfinished projects were canned, robbing America of greater healthcare access — and a lot more beds to deal with today’s crisis.

To be sure, the federal government has also engaged in a wide variety of activities that favor hospitals over other models, but in each of unnatural interventions, the consequences are the same:  government continues to impose delivery models upon the population and with it, its bias of how healthcare is provided to the consumer.

As a result, the market is not free to respond to consumer demands and cost-saving opportunities in an efficient manner.  Thus, we are never given the opportunity to develop the right number of hospitals and the correct number of physicians, nurses, physical therapists. . .you get the point.

Now, we are faced with the challenges of a pandemic where many, including President Trump, have observed that we were not ready with a coordinated response mechanism.  In point of fact, we weren’t even ready with a baseline set of operating resources with which to handle the larger numbers that would present themselves, and the blame lies squarely on government for attempting to impose upon us its ideas of what those numbers should be, instead of allowing the market to settle upon them by itself.

If it had allowed the market to freely operate, we would have more hospital capacity, more medical personnel and more supplies.

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2 replies
  1. Royal A Brown III
    Royal A Brown III says:

    A spot on analysis by Dr. Gonzalez of how the left’s policies are why we don’t have enough hospitals, doctors and nurses to deal with the Communist China Party (CCP) Virus (aka coronavirus) outbreak.
    The left wants socialized or universal medical care at all costs and couldn’t care less that they created the situation now where our system can’t keep up with the CCP Virus outbreak.

    Remember the “Death Panels” setup under Obamacare – well these would be real and people over 70 would not be given adequate treatment under universal or socialized healtcare.

  2. Glynnda White
    Glynnda White says:

    I would add that the left wants socialized medicine, but also that they put these stupid laws and regulations into place to guide the system toward socialized medicine over time. Things like “Certificates of Need” were not only something existing hospitals demanded to keep out unwanted competition thus increasing their bottom lines, but also democrats got behind because it would in time provide the impression that private hospitals are greedy and care more about their bottom line than their patients. Republicans being free market people, stupidly went along to get some campaign dollars while appearing to support free market activity….if true competition were introduced into the system, we would see health care costs plummet, specialized medical systems in place for chronic illnesses such as Blood Pressure, Diabetes clinics, systems specifically set up for the aging to deal with the problems that come with aging, the system would take off. People would be much healthier for much longer and actually LIVING until they die…at a much lower cost than the current system provides….if states were to curtail malpractice awards, and how much of a percentage the attorneys involved could take upon winning a case, health care costs would PLUMMET….we must eliminate socialist practices from our regulatory system….


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