Appendix H: Hospital ownership around the world, and the legal ladder for the takeover cases

This appendix supports the section "Ownership: ban the dividend, not the owner" in the plan.

The finding

It is widely assumed on the left that America's hospitals are uniquely for-profit and that this explains the cost. The comparative data does not support either half of that.

America is in the middle of the pack on for-profit hospitals. At 17.4 percent of beds in investor-owned hospitals, the United States sits below Italy at 34.6 percent, Germany at 32.1 percent, France at 24.5 percent, and Spain at 18.5 percent. Italy has twice America's for-profit share, spends $4,866 per person against America's $13,473, and its people live longer.

The two systems that are the most private are among the best. South Korea runs the most privately owned hospital system in the developed world, with a public share of beds lower than America's, and it spends $4,798 per person for a life expectancy several years longer than ours. Japan's hospitals are mostly small private institutions, many of them physician-owned, and Japan spends $5,365. Both countries are private, cheap, and good.

What they share is not the ownership form. It is a rule about the money. In both Korea and Japan a hospital may be privately owned, but it may not be run for the profit of investors. Japanese law has barred for-profit corporations from owning hospitals since 1948, and the medical corporations that own most hospitals are prohibited from distributing surpluses; a surplus is reinvested or retained. Korean law has the same structure. Almost none of either country's private hospital capacity is investor-owned, because there is no investor return to be had. The hospital is private in the sense that a church or a university is private, not in the sense that a retail chain is.

Whatever is wrong with American hospitals, "too many for-profit hospitals" is not what separates America from the countries that work. What separates them is the conditions attached to the money.

What the countries that work actually do

Three things, in different mixes.

They ban the distribution of profit, not the private owner. Japan and Korea, above. Germany, with a third of its beds in for-profit chains, constrains what those chains can do through uniform prices and a national fee schedule, so the profit comes from efficiency rather than pricing.

They set the price. In no comparable country does a hospital set its own prices. The price is set nationally, by schedule or by negotiation, and it is the same whoever pays. American hospitals charge commercial insurers roughly two and a half times what they charge Medicare for identical services, and the whole apparatus of networks, negotiations, and chargemasters exists to extract that difference. Remove the ability to set the price and the incentive to consolidate for pricing power goes with it.

They separate capital from operations. Hospitals in most well-run systems do not fund expansion out of operating margins. Capital comes from a public budget allocated by need. An American hospital that wants a new wing has to earn the margin to build it, which is why capacity chases the profitable service lines, cardiac and orthopedic, and abandons the unprofitable ones, obstetrics and psychiatry, and why it chases them in the wealthy suburb and not the poor county.

The plan's rule: conditions of participation

The plan converts nobody. A hospital, a practice, or a clinic may be investor-owned, non-profit, religious, or public, and it stays what it is. What changes are the terms on which the national payer buys care from it.

• No distributing profits to shareholders. Surpluses are retained or reinvested. This is the Japanese and Korean rule.
• No refusing patients the public system covers.
• No setting your own prices. Hospitals are paid a negotiated global budget; clinicians are paid from the national fee schedule.

These are conditions of participation, the same legal form as the hundreds of conditions Medicare already attaches to every hospital that bills it, from emergency-treatment obligations to infection control. A provider unwilling to accept them does not have to bill the public payer, which is what keeps the arrangement voluntary in law and outside the reach of a takings claim. It is also, once there is one payer, an offer no institutional provider can decline, which is what makes it enforceable. It is a narrower ask than nationalization and a harder one to argue against, because the plan proposes nothing that Japan and South Korea have not already done.

The safeguards. A provider that cannot distribute profit can still enrich its owners by hollowing out the institution, and private-equity ownership of American hospitals has produced a catalog of the methods. The plan bars each one. No sale-leaseback or mortgaging of core clinical real estate without regulatory approval, which is the transaction that left the Steward hospital chain paying rent on buildings it had owned and then collapsing in 2024. No debt-funded payouts to owners. The national staffing ratios, since cutting quality shows up in staffing before it shows up anywhere else. And open books, including full public reporting of related-party transactions, which is how the money is usually moved.

Public ownership: three jobs

Private providers continue under the plan, and the public system expands alongside them for three specific purposes.

Reopening what closed. Where a rural hospital has shut and no private operator will reopen it, the public builds and runs it, with a guaranteed budget that makes low volume survivable. Nobody else is going to.

A benchmark in every region. A publicly run system sets a floor on quality and a reference point on cost, the way public universities do for higher education. The VA already plays this role, and on most measures of quality it outperforms the private sector, whatever its reputation.

The rare takeover. Taking over an existing provider is the exception, reserved for operators who have stripped assets or endangered patients and so forfeited the presumption that they should be trusted with public money. Four legal routes exist, and the plan prefers them in this order.

The legal ladder

1. State charitable-trust and licensure authority. Most American hospitals are nominally non-profit, and many have drifted far from any charitable purpose while keeping the tax exemption. The assets of a non-profit are held in charitable trust, and every state's attorney general has authority over charitable assets, including the power to block a conversion or sale, to enforce the charitable purpose, and to seek the removal of a board that has betrayed it. Hospital licensure sits with the states as well. A willing state can convert the governance of a failing non-profit hospital with no federal action at all, which makes this the natural proof of concept before any federal fight, and the plan's ownership conditions take effect in cooperating states first.

2. Antitrust divestiture. That prices rise sharply after hospital mergers in concentrated markets is one of the best-documented findings in health economics, and the last two decades have been a period of continuous roll-up: hospitals into systems, physician practices into hospitals and into private-equity platforms. Court-ordered divestiture is a standard antitrust remedy, and divestiture to a public entity or a new community non-profit is available as a form of it. Congress has already voted, on a bipartisan basis, to apply competition law to this industry: in January 2021 it repealed the exemption that had shielded health insurers from federal antitrust law since 1945. This is the route to unwinding the roll-ups.

3. Fraud enforcement. Health care fraud is estimated at $150 to $500 billion a year, and recovered fraud runs in the low billions, so enforcement is nowhere near proportionate to the conduct. The tools are severe when used. The False Claims Act carries treble damages and per-claim penalties that can exceed an entity's entire value. Exclusion from federal programs is fatal to any provider dependent on government revenue, and under a single payer it is fatal without exception. That leverage is what makes the conditions of participation enforceable: accept the rules, or lose the ability to bill the only payer there is. But fraud enforcement produces settlements and monitorships, not ownership. The plan uses it as the moral case for why particular operators lost the benefit of the doubt and as the instrument against the worst of them, and does not build the architecture on it.

4. Eminent domain, narrow use only. The government can take a hospital as it can take any property, and it must pay just compensation, which makes this expensive at scale and pointless against an operator who would rather be bought out. The plan reserves it for specific facilities the public needs reopened, where a closed hospital is worth near nothing on the market and buying it outright costs less than building.