The State’s Healthcare Monopoly:
A Lesson in Crony Capitalism
Imagine a man named Dr. Smith, a hardworking independent orthopedic surgeon. He runs a small, efficient practice, treating patients at a reasonable price.
He competes on value, quality, and affordability. His office is lean, his team is dedicated, and his patients appreciate the personal care.
Then, one day, a new player enters the market not a private competitor, but the state itself. The university health system down the road, an arm of the state government, has decided that it wants a bigger piece of the healthcare pie.
Unlike Dr. Smith, this state-sponsored system pays no taxes. No corporate taxes, no property taxes, no income taxes. Its land, buildings, and operations are all subsidized by the taxpayers who never consented to funding its empire.
It uses this advantage to expand aggressively, acquiring physician practices, opening new outpatient clinics, and driving up reimbursement rates under the guise of nonprofit healthcare.
Dr. Smith, on the other hand, must pay every dollar in taxes, abide by every government regulation, and compete in an already rigged system where hospitals receive higher reimbursement rates for the same procedures.
He may be more efficient. He may offer better prices. But he is fighting an opponent that does not have to follow the same rules.
When the Referee Joins the Game
What we have here is not competition. It is the state inserting itself into a private marketplace and tipping the scales in its own favor.
A university-affiliated hospital system is not a nonprofit in any meaningful sense of the word. It operates as a business, but unlike a business, it does not have to play by the same financial rules.
It expands without risk.
It raises capital without scrutiny.
It competes while avoiding taxes that every other private physician, surgery center, and hospital must pay.
This is not the free market at work. This is crony capitalism, where the government picks winners and losers—not based on efficiency, not based on innovation, but based on which entity has the legal privileges that others do not.
The Fiction of Nonprofit Medicine
Consider this: The CEO of the state-affiliated health system earns millions of dollars in compensation. Its administrators collect generous salaries, its executives live in luxury, and its expansion plans look like those of a Fortune 500 company.
And yet, it insists on calling itself a nonprofit.
What exactly is nonprofit about an organization that charges more than private facilities for the same procedures, extracts massive facility fees from patients, and uses its revenue to buy out independent physicians and expand its empire?
If a private hospital system did the same thing, politicians would be calling for regulation, price controls, and antitrust enforcement.
But when the state does it? It’s just serving the public good.
Dr. Smiths Final Stand
So what happens to Dr. Smith?
The pressure mounts. First, his referral networks start drying up as the state hospital acquires more local physicians. Then, the insurance companies steer patients toward the state hospitals high-priced system. Finally, the state hospital buys the medical building where he leases his practice, raising his rent and forcing him out.
One day, he wakes up and realizes that he is no longer competing against other private practices. He is competing against the state itself.
The only way forward? He must sell his practice to the very institution that drove him out.
And just like that, another independent physician is absorbed into the growing monopoly of state-sponsored healthcare.
The Free Market Choice: Compete or Get Out
What is the solution? It is simple.
If a state university health system wants to act like a private hospital, it must be taxed like one.
It must pay:
Corporate income taxes on its billions in revenue.
Property taxes on its vast real estate holdings.
Sales taxes on its services and equipment.
It must operate without government protection, without taxpayer subsidies, and without special privileges.
And if it wishes to retain its tax-exempt status, then it must stop competing directly with the private sector. It must focus on research, on education, on training the next generation of physicians, not on empire-building.
Because as long as the state is allowed to compete against its own taxpayers, there will be no real competition at all.
And Dr. Smith? He never had a chance.
-Rojas out