I blog about free markets in medical care and transparent pricing.
From now on, I am going to refer to “not for profit” hospitals as “not show a profit” hospitals. I believe that no other group deserves more blame for the disastrously expensive state of health care in this country than these big “not show a profit” hospitals. They, of course, have an incredibly powerful lobby, the American Hospital Association, which has bribed sufficient players in D.C. to allow them to have their way with the sick. I thought it might be useful to review their role to date.
These big hospitals were granted a concession of tax-free status when required to see all patients (that could pay or not) that came through their doors. The value of this concession is incalculably huge and while sufficient to cover the costs of indigent care and finance hospital expansions, was nonetheless insufficient to slake the greed of those running these outfits.
The poor mouthing tactics of the “not show a profit” hospitals have gone on for some time but reached a fevered pitch in the mid to late ‘90’s when physician-owned specialty hospitals made their debut (my apologies to those physician-owned hospitals that predated this time). “Doctor owners are cherry picking,” was their cry! “They are leaving us with all of the patients who can’t pay,” they screamed. Here in Oklahoma, a state-commissioned “Trauma Task Force,” was hijacked by these goons, using that vehicle to make an anti-competitive case against these new physician-owned facilities. A libertarian-leaning legislator saw to it that I was put on this task force. Here I learned first-hand the lengths to which these hospitals would go to avoid the competition that is present in every other sector of our economy.
All the while, the hospitals were lobbying for disproportionate funding from Medicare and Medicaid, compared to physician-owned facilities. They prevailed and today if you have your knee replaced at a “not show a profit” hospital in Oklahoma City, Medicare will pay them twice what the physician-owned (and far superior) orthopedic hospital will be paid. Those greedy doctors! Summing this up, big hospitals successfully lobbied to be paid more, lobbied to have physician-owned facilities be paid less, screamed they were going broke and accused the greedy doctors of cherry picking.
Let’s keep going. Unsatisfied with their tax-free status and disproportionate government payments, the hospitals pulled off their ultimate heist: the uncompensated care scam. Declaring any amount of their bill which they did not collect, “charitable care,” they managed to secure even higher Medicare and Medicaid funding based on this fiction. Uncle Sam provides DSH (disproportionate share hospital) payments to hospitals based on the amount they claim they didn’t collect. This incentivized the hospitals to produce the most outrageously fictitious bills they could, as this padded their DSH payments. This “uncollected” amount also helped maintain the fiction of their “not for profit” status. The more hospitals “lost”, the more they made, kind of a reverse-Enron, overstating losses instead of gains.
(Insurance companies discovered that they could “sell” their services to “re-price” these false bills and make billions in this way. I have discussed the mechanics of this in prior posts. Let’s stay on these hospitals, though.)
Still not satisfied and continuing the poor mouthing lie, hospitals justified their outrageous bills by saying that they were going broke from all of the “charity” care they were delivering. You can see now that they were being paid for this “charity” care by the taxpayer even if the patient wasn’t paying them. The hospitals began more aggressively “shifting the costs” to those who were paying their bills, even though there were no costs to shift.
(Insurance companies were drowning in their champagne as they saw this as this gave them justification for raising premiums and padded their “re-pricing” profits.)
Think I’m wrong? Look at the building cranes in front of these large hospitals. The largest crane I’ve ever seen is in front of St. Francis Hospital in Tulsa as I write this. The Catholic Hospital Association, of which they are a member, pushed hard for the Unaffordable Care Act, as they stand to make money like never before, getting paid by “insurance” while continuing their uncompensated care scam.
Look at the devastation of rural hospitals inflicted by the big hospitals. First the giant hospitals buy all of the doctors in town, turning them into referral tools, requiring that they transport every patient they can to the mother ship, then they buy the rural hospitals in a hostile takeover, having bankrupted them with this scheme.
One Catholic hospital system has made so much money with the above schemes that they simply can’t figure out what to do with all of it. So they set up a separate supply-purchasing company that after procuring goods for their hospitals, marks it up to themselves, allowing them to dump unlimited profits from their “not show a profit” mother ship.
I suppose I should mention that the administrators of these facilities make millions of dollars every year. The head of the Catholic Hospital Association (a nun) makes 1 million dollars a year! That’s a bunch of cash to cram in her habit.
That vulnerable and sick people have been bankrupted by these criminals, makes me mad. They couldn’t have done it without the willing assistance of our friends in Washington, D.C., however, the same folks who have brought us the Unaffordable Care Act. State governments bear much of the blame, as well, as powerful state hospital associations have showered local legislators with enough dough to shut out the hospitals’ would-be competitors.
Out of one side of the legislator’s mouth, we hear about “access issues” and the “high cost of health care.” Out of the other, they say to their hospital buds, “…thanks for the check. I’ll see to it that no other facilities open to make you price-competitive.” “I’ll tell the voters it’s for their safety and that we need to protect the integrity of our hospital systems so you’ll be there when we need you.”
G. Keith Smith, M.D.