Hospitals increase cost of health care...and pick and choose what they market to whom

The greed of pharmaceutical and insurance companies is the stuff of legend. There can be no justification for the huge costs that the American people have to bear as a result. Their administrative costs and profits alone are unconscionable and drive up the cost of health care so much that it takes a completely self-serving and willfully ignorant Democratic presidential candidate to disingenuously ask “how will we pay for” Medicare for All – and we  have a lot of them. The financial cost is, however, is not the most evil part of what they do. That would be the deaths and disability and bankruptcy that affects so many Americans because the insurance companies deny them care and the pharmaceutical companies make their drugs unaffordable. (This is a mild term for drugs that can cost $30,000-$100,000 a year and more!)

I have written about these issues many times. More recently I have also written about the role that providers (mainly hospitals and “health systems”, but also some physicians, nursing homes, etc.) play in the two-pronged scandal of the US health care system – too expensive and too unavailable to too many. There are some hospitals (I include “health systems” but will use “hospital” to avoid confusion with the “health care system”) that are actually for-profit, but most are officially “non-profit”. This means that they don’t have shareholders – and don’t pay taxes – but they otherwise behave just the same, trying to make as much money as possible. They say that they plow this back into the services that the hospitals provide, but it also includes salaries for C-suite executives that look just as outrageous as those in the “for-profit” sector.

More important, the “improvement” in services does not always – or even usually – create new services that were absent from the community previously, or make them available to more people than previously, say the poor and uninsured. They are usually efforts to attract insured, paying, profitable patients away from other hospitals by building a new, fancier cancer center, or heart center, or orthopedic center. Hardly ever pediatrics (except neonatal intensive care) or mental health – they only want to expand those services that are big profit centers. In this way, it is parallel to the behavior of drug companies; they prefer to minimally modify existing big sellers to get a piece of that market (“me-too” drugs) rather than to develop drugs to meet needs not currently being met.

It is good to see the hospitals being called out by major health system critics. Elisabeth Rosenthal, president of Kaiser Health News, wrote an important article on September 1, 2019 in the New York Times (where was once the health reporter) titled “That Beloved Hospital? It’s Driving Up Health Care Costs”, in which she makes many of the same points. She writes that

Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than gross domestic product, inflation and wage growth. Spending on hospitals represents 44 percent of personal expenses for the privately insured, according to Rand.

A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42 percent from 2007 to 2014 for inpatient care and 25 percent for outpatient care, compared with 18 percent and 6 percent for physicians.

The reason, of course is the political clout that the big hospitals can buy (with, of course, our money!).The Democratic presidential candidates are beholden (with the exception of Sens. Sanders) to both hospital contributions and the role of big hospitals as major employers and economic drivers. “In 2018, PACs associated with the Greater New York Hospital Association, and individuals linked to it, gave $4.5 million to the Democrats’ Senate Majority PAC and $1 million to their House Majority PAC. Its chief lobbyist personally gave nearly a quarter of a million dollars to dozens of campaigns last year.” Could this have anything to do with why “The cost of a hospital stay in the United States averaged $5,220 a day in 2015 — and could be as high as over $17,000, compared with $765 in Australia”? Ya think? Ask you politicians what they are going to do about it…

The media, including Kaiser Health News, has been running stories on hospitals that are aggressively pursuing lawsuits against patients who have been unable to pay their bills. On September 3, 2019, the Times ran a long piece on the poster child for this practice, Carlsbad Medical Center in New Mexico, in “As Patients Struggle With Bills, Hospital Sues Thousands”, but Carlsbad is by far not the only one. The practice is most common in towns with just one hospital, and of course, patients do not know how much they owe – or for what. It doesn’t matter if you are insured: “Ms. Price, 40, a nurse and local 4-H leader, has been sued five times by Carlsbad Medical Center, for bills totaling more than $17,000….Ms. Price said she had never received an itemized bill outlining exactly what she owed money for. The collection agency wanted the balance in full, and she was not able to work out a payment plan until after she was sued.”

This article names other hospitals that sue patients as a core business practice, and mentions over 20,000 suits in Virginia. Turns out that this was in no small part driven by the state-owned University of Virginia hospital in Charlottesville, documented by the Washington Post and MSN in “‘UVA has ruined us’: Health system sues thousands of patients, seizing paychecks and putting liens on homes”. In a quick response, the Governor of Virginia and the University vow to stop suing patients, but this has apparently not affected those already sued: ‘“Fixing the problem “is complicated,” in part because “we are legally obligated as a state agency to collect debts,” he [UVA president Ryan] said. “But we have discretion within those legal constraints to make our system more generous and more humane.”’ It also has not hurt the CEO of the hospital “…Pamela Sutton-Wallace, who will leave in November to join New York-Presbyterian Hospital as a senior vice president”. Maybe she can teach them to sue their patients…

Many of us have sort of emotional attachments to our local hospitals, where we were born, or delivered our babies, or had our life-saving surgery or other treatment; for which we raised money through bake sales and car washes, or maybe volunteered in the gift shop. But these are not the warm fuzzy hospitals you remember. Rosenthal acknowledges that many rural hospitals are in financial trouble – and they are – but supporting the fantastic (“non-”) profit of these major hospitals is not going to change that. As in every other sector of society, we have two classes of service. One is to those in major metropolitan areas with money or good insurance, with conditions that are highly-profitably reimbursed, like cancer. Preferably all of the above. There is no limit to what will be invested in them. Then there are those without money, or good insurance, who live in rural areas, or have problems that are not well reimbursed, like mental health or substance use. They will not get investment. Simple as that.

Major hospitals are big businesses and act like it. You are a customer – but, compared to other industries in which you are a customer, a particularly uninformed one. Need a car? A refrigerator? Financial services? Dental care in Mexico (had to get that one in)? You can find out what it will cost and compare prices. Hospital care? In the US? You gotta be kidding.

The answer? Improved an expanded Medicare for All, a single-payer system in which, as in Canada, hospitals get global budgets, and separate capital budgets so that they cannot use the money (profit) they earn on your care to build spas to attract high-paying patients from competitors. Where everyone gets the care they need, and no one gets excessive care. Possible? Too expensive? Ask the Canadians. Or Australians, where the average hospital bill is less than $800. Or British, or French, or Swedish, or Danish, or Dutch, or German, or Taiwanese….