Rick Anderson on How to Help Hospitals and Lower Health Care Costs

Opinion column published in The Morning Call April 19, 2026.

Lower health-care costs by giving hospitals break from regulations.

The recent opinion column, “Hospital monopolies driving Pennsylvania health care crisis,” published March 14 in The Morning Call, is a misguided generalization of the all-too-familiar “blame game” directed at Pennsylvania hospitals. The health care system of today is complex and confusing for even the most sophisticated consumer, with no simple fix.

Health care is a local issue for everyone in our valley and generalizations in the recent opinion column do not apply to St. Luke’s. All hospitals are not created equal, and we at St. Luke’s do not believe that “bigger is better.” We believe “better is better.” St. Luke’s cares for all the sick and injured regardless of their ability to pay — that is our responsibility.

Let me provide additional facts to explain the reality of the environment that all hospitals experience:

• Fact: Many factors are responsible for the causes of health care affordability, including inflation, technology enhancements, pharmaceuticals, wage increases, staffing shortages, smothering redundant regulatory guidelines, overutilization, aftereffects of COVID, and importantly charitable care obligations for hospitals to provide care to those less fortunate. St. Luke’s charitable care totals $517 million a year, or 16% of its annual budget, as documented in IRS Form 990, demonstrating our commitment to the communities we serve, regardless of patients’ ability to pay.

• Fact: Medicare and Medicaid do not reimburse hospitals the full costs to provide care. Over 60% of our patients are covered by Medicare and Medicaid, paying us less than 80% of our associated costs. This difference, in part, is passed on to our consumers. Medicare and Medicaid reimbursements create affordability issues.

• Fact: Government and insurance companies’ policies, regulations and bureaucracy require hospitals to hire an army of staff to deal with these unnecessary regulatory issues, dramatically increasing the cost of caring for our patients. Hospitals are more regulated than other companies, including public utilities. The regulations conservatively add 20% to hospital costs, creating affordability issues.

• Fact: The U.S. Department of Health and Human Services in 2025 determined through an analysis of public data that St. Luke’s is the No. 1 health system in the U.S. for quality, safety and patient experience — the best of the best. This recognition underscores why St. Luke’s is able to provide care at costs lower than 97% of our peers across the country. St. Luke’s costs also average at least 20% less than our Pennsylvania competitors, based on our analysis of the data. High-quality results in proven cost-effective care for our community and reduces costs for our patients. To emphasize the point, high quality unquestionably reduces affordability issues.

• Fact: Hospital margins are razor thin. St. Luke’s averaged a 2.8% operating margin for the last 20 years. While impressive in comparison with the rest of the hospital industry, this level of performance is necessary to assure continued access to quality care. By any measure in any other business, this result would not be considered cause for celebration, but for the hospital industry it is outstanding.

So, what should we do about the health care affordability problem? If I had a magic wand, I would reduce unnecessary government and insurance-industry regulation and bureaucracy.

Annual U.S. health care spending now totals roughly $5 trillion. If U.S. health care spending were the gross national product of a country, it would rank as the third largest economy in the world, behind only the United States and China. Research from respected academic institutions and think tanks consistently shows that government and insurance red tape accounts for a substantial share of these costs — by our estimates, at least $500 billion annually.

In theory, a majority of these rules and regulations exist to protect taxpayers from fraud and abuse. In practice, many are misguided, redundant or pointless, generating little more than expensive, time-consuming busy work for everyone involved. Many of the rules imposed on hospitals were created to address problems caused by a relatively small number of bad actors. Collective punishment is a bad idea. The health care regulatory environment resembles a tree whose branches have grown out of control and is long past due for serious pruning. Wake up, Congress.

Why not give hospitals like St. Luke’s and others, which have consistently and factually demonstrated high quality and integrity and achieved lower costs, relief from antiquated regulations that are conservatively costing St. Luke’s $200 million annually?

Doing so would also yield an important secondary benefit by incentivizing other hospitals to meet the same standards of performance and efficiency. Competition of this nature would ultimately lower costs, improve care and benefit everyone, including the taxpayer (it would even lower taxes).

We at St. Luke's, an independent health care system governed locally, are different from other health systems for many reasons, including our exceptional employees who are responsible for the culture and outstanding care our patients receive. They are the ones that make the difference.