As with groceries and gasoline, the sticker shock that consumers experience at hospitals and the doctor’s office is real. Given rampant inflation and rising healthcare expenses, it is not surprising that most American families find it hard to pay their medical bills.

Healthcare prices have risen for various reasons, including the higher costs of finding life-saving treatments and bringing new medical innovations to market, but also because many hospitals lack genuine market competition and overspend on construction and unnecessary amenities. Patients benefit from improved treatments and better medicine that help them live longer, healthier lives. But not all healthcare costs provide those benefits.

Studies have shown that hospital mergers and health system consolidation have reduced market competition and raised prices at for-profit and non-profit hospital systems—without improving patient healthcare. Without viable market competition, hospitals can demand higher prices from insurers and patients, with little concern that patients will forego treatment or find it elsewhere. In such cases, hospitals can spend lavishly on construction and expansion, even as many hospital beds remain vacant, according to the most recently available federal data.

A new Columbus-area hospital project, for example, will cost nearly $2 billion, adding hundreds of private rooms, state-of-the-art entertainment, gourmet food, and other amenities that some health experts have rightly questioned. On one hand, many of the equipment and medical upgrades will be used and needed as Columbus grows. On the other hand, however, the record-setting construction costs and luxury items will make healthcare more expensive for insurers, Medicare, businesses, and patients, with little evidence that they will improve the quality of care.

Doctors and hospitals are vital to American healthcare. But to keep healthcare affordable and accessible to the people who need it, hospitals and healthcare systems need competition and responsible spending. Policymakers should look for ways to help ensure both.       

Rea S. Hederman Jr. is vice president of policy and executive director of the Economic Research Center at The Buckeye Institute.