On a recent call some of my peers, Jeff Smith, David Balinski, and Mike Miele, we kicked around a number of happenings as we often do — touching on politics, life, family, and the healthcare industry. As we dove into the complexities of healthcare, I floated an idea: what if we made some component of healthcare a utility? After some thoughtful discussion, we landed on a specific candidate: hospitals.
It might sound radical at first, but let’s explore the rationale behind this idea, the history of utilities, and why transforming hospitals into a utility might just be the path forward to promote fairness, transparency, and a more balanced capitalistic system.
A Brief History of Utilities
In the early days of modern society, essential services such as water, electricity, gas, and telecommunications were often provided by a patchwork of private companies. These services were critical to public well-being but lacked oversight, leading to inconsistent quality, unfair pricing, and limited access.
Over time, governments recognized the need to regulate these services to ensure universal access, fairness, and reasonable costs. These essential services were categorized as public utilities, which meant they:
- Operated under strict regulatory oversight.
- Ensured universal access regardless of geography or socioeconomic status.
- Maintained transparent pricing to prevent exploitation.
- Focused on public benefit over excessive profit motives.
This approach didn’t eliminate private enterprise; instead, it created a balance where services could still be delivered efficiently while protecting the public’s best interests.
Now, let’s consider how this model could apply to hospitals.
Why Hospitals Fit the Utility Model
Hospitals provide a critical service, one that every person will likely need at some point in their lives. Yet, despite their essential nature, hospitals often operate within a flawed system where access, affordability, and transparency are inconsistent. Here’s how hospitals align with the characteristics of a utility:
1. Essential Service
Hospitals are indispensable. They provide life-saving care, perform surgeries, treat emergencies, and manage chronic illnesses. Just as electricity keeps the lights on, hospitals keep us alive and healthy.
2. Public Good
Hospitals serve entire communities, contributing to public health, disease prevention, and emergency preparedness. In times of crisis — pandemics, natural disasters, or accidents — they are a cornerstone of societal stability.
3. Regulation and Oversight
Hospitals are already subject to extensive regulations, from patient safety standards to billing transparency requirements. However, these regulations often fall short of ensuring consistent, fair practices. Treating hospitals as a utility could strengthen oversight to protect patients and communities.
4. Universal Need
Healthcare is not a luxury; it’s a necessity. Everyone, regardless of income or location, should have access to hospital care when they need it. A utility model could help close gaps in access and prevent healthcare deserts, especially in rural or underserved areas.
5. Infrastructure Dependence
Hospitals require significant infrastructure — advanced medical equipment, skilled staff, and facilities that run 24/7. Like traditional utilities, hospitals are large-scale operations that need reliable, continuous service.
The Current Challenges
Despite their importance, hospitals today face numerous challenges that prevent them from serving the public effectively:
- Profit-Driven Incentives: For-profit hospitals often prioritize revenue over patient outcomes, leading to inflated costs and unnecessary procedures.
- Opaque Pricing: Even with the Hospital Price Transparency Rule, prices remain confusing and inconsistent.
- Access Inequality: Rural hospital closures and limited facilities in low-income areas create gaps in care.
- Complex Payment Systems: A labyrinth of insurance reimbursements, billing codes, and out-of-pocket costs makes healthcare difficult to navigate.
These issues underscore the need for a model that promotes transparency, fairness, and accountability — principles that align with a utility framework.
The Utility Model: A Path Forward
Converting hospitals to a utility doesn’t mean turning them into government-run entities. Instead, it means applying utility principles to balance public good with private enterprise. Here’s how it could work:
1. Transparent Pricing
Hospitals would operate with clear, standardized pricing for procedures and services. No more surprise bills or inflated charges. Patients and employers would know what they’re paying for.
2. Universal Access
A utility model would ensure that every community has access to hospital care, whether through direct facilities, telehealth integration, or mobile units. This would prevent rural and underserved areas from falling through the cracks.
3. Regulated Profit Margins
Hospitals could still operate profitably, but within regulated margins to prevent excessive profiteering at the expense of patients. This balance promotes ethical capitalism — rewarding efficiency and innovation while protecting public interests.
4. Community Accountability
Hospitals would have obligations to their communities, similar to non-profit requirements under 501(r). This includes providing community benefits, supporting public health initiatives, and being transparent about how funds are used.
5. Value-Based Care
Shifting incentives from fee-for-service to value-based care would align hospitals’ goals with patient outcomes. Hospitals would be rewarded for keeping people healthy, not just for providing more procedures.
The Benefits of This Approach
- Fairness: Every patient receives fair treatment and pricing, regardless of background or location.
- Transparency: Clear, upfront costs and simplified billing.
- Ethical Capitalism: A system where private enterprise thrives but operates within boundaries that protect the public.
- Healthier Communities: Improved access and focus on preventive care lead to healthier populations and reduced overall costs.
- Reduced Complexity: Simplified systems for both patients and employers, making healthcare easier to navigate and manage.
The Future is Fair and Transparent
Our current healthcare system has its roots in free-market principles, but when it comes to essential services like hospital care, the market alone has failed to deliver fairness and transparency. Adopting a utility model for hospitals doesn’t abandon capitalism — it refines it. It ensures that while innovation and efficiency are rewarded, the core mission remains serving the public.
Hospitals as a utility could be the bridge between the chaos of our current system and a future where healthcare is accessible, ethical, and transparent for all.
And that’s a future worth striving for.
#WeFixYourHealthcare
