
Doctors can’t own hospitals. Ever wonder why? Short answer: Pete Stark, a four-page law Reagan signed without reading, and 80 years of the government fixing its own fixes. The longer answer is one of the better origin stories in American policy. Hill-Burton in 1946 solved a real problem (not enough hospitals) so well it created a new one (way too many hospitals). CON laws in 1974 tried to fix that, didn’t work, got repealed federally in 1987, but 36 states kept them anyway because incumbent hospital systems realized they were a great way to block competition. Then Medicare and Medicaid blew up demand in ways nobody predicted. Then EMTALA made ERs a legally mandated safety net with zero federal funding attached. Then Stark showed up to stop doctors from referring patients to facilities they owned. Then the ACA closed the last loophole that let them. Then 340B, a tiny 1992 drug discount program, quietly became a $66B/year machine that barely resembles its original purpose. None of it was designed. All of it was improvised. Every fix created the next problem. For anyone deploying capital or building companies in health tech, this history is basically the operating manual for why the market looks the way it does. CON laws, Stark compliance, 340B mechanics, EMTALA cost structures - these aren’t background noise. They’re the load-bearing walls. ----- Link to the full analysis onhealthcare.tech/p/how-the-gove…









