Editorial: Too much health care?

Hospital services are about to double in Ozaukee County; the Village of Grafton will benefit, but health care bill payers likely won’t

Ozaukee Press, August 16, 2007

If the health business worked like other enterprises in the American economy, the news that Aurora Health Care plans to build a hospital in Grafton should have Ozaukee County residents dancing in the streets.

If the law of supply and demand worked in health care, Aurora’s plan, which would just about double the supply of hospital services here, would reduce health costs in the county.

But that is not going to happen because, like a drug-resistant virus, the health care industry does not respond to the market influences that affect other businesses. Time and again, experience has shown competition does not cause the prices of health services to fall.

The fact that most fundamental economic rules do not work for health care ought to be taken as a hint that the answers to America’s health care problems won’t be found in so-called market-based solutions.

The market so far has failed the American health-care delivery system, which is in poor health in terms of accessibility to services and measures of the health of the U.S. population compared to that of other developed nations. The health care business, on the other hand, is the picture of vitality, as Aurora’s bold moves attest.

It is estimated that Aurora is spending nearly half a billion dollars to build a hospital in Waukesha County, buy Advanced Healthcare, which operates clinics in Port Washington and Grafton and other locations in the area, and build the hospital in Grafton.

The Grafton hospital will be located just up the road from the sprawling, currently expanding Columbia St. Mary’s Hospital in Mequon. Services will be duplicated on a prodigious scale.

Someone will have to pay for this excess. Studies have shown that areas with more hospitals and related services have higher health care costs, though not necessarily better health for their residents.

While Aurora’s announcement raises red flags for the cost of health care in an area that already is burdened with some of the highest health costs in the country, it’s hardly bad news when viewed from other perspectives.

The hospital, representing an investment that might approach $200 million, will be Grade-A development, an economic boon to Ozaukee County and especially the Village of Grafton. It will bring jobs, auxiliary development and new residents, some of them health care professionals representing lofty demographic categories.

Grafton will realize intangible benefits as well, such as the pride of being home to what may be a state-of-the art medical institution and the security its residents will feel living near first-rate medical services.

In fact, if a second hospital within five miles of another in Ozaukee County were really needed, we would all be cheering. But need is the unanswered question. In some states, notably Minnesota, where health care costs are markedly lower than Wisconsin’s, hospitals cannot be built without proving the need for the facilities. Not so in Wisconsin. Here the health care businesses decide how many hospitals will be built. That would be a laudable expression of the private enterprise system if health care followed the economic rules. That it doesn’t is one more argument in favor of government-managed health care.