Outrageous behavior by hospitals harms Americans' health to make money

The article in the NY Times (June 1, 2023) titled “This Nonprofit Health System Cuts Off Patients With Medical Debt” carries the subhead “Doctors at the Allina Health System, a wealthy nonprofit in the Midwest, aren’t allowed to see poor patients or children with too many unpaid medical bills”. That sounds bad. It is bad. It is disgusting. It is reprehensible. But it is only one example of the extreme lengths many “non-profit” hospitals go to in order to maximize their income (their “non” profit!) at the cost of limiting care to people.

I don’t know how many hospitals, hospital chains, or “health systems” have gone as far as Allina in explicitly refusing to see patients, but most of them go as far as they think they can – and maybe tiptoe over the line. The article states that “Many hospitals in the United States use aggressive tactics to collect medical debt. They flood local courts with collections lawsuits. They garnish patients’ wages. They seize their tax refunds.” This is, unsurprisingly, most prevalent among those that can do it, those that are wealthy, those that are in urban or suburban areas where they can make money taking care of insured people. (A different calculus informs the often-marginal rural hospital.)

It is, in theory, possible to have two different worldviews regarding this situation. One (mine) is that the main purpose of health care, hospitals, doctors, etc., is to improve the health of the population, not to make money. To the extent that the pursuit of money gets in the way of (or explicitly blocks) caring for the health of people, it is wrong, unethical, and should be condemned. Another possible view, however, is that the business of any business (making widgets, providing income tax services, flogging corporate interests on the internet) is to make money, and that healthcare is just another business, and if some people can’t afford it this is no different from someone not being able to afford a car. I do not believe this, and think it is a morally vacuous position (and, more important, one that actually hurts people), but it is popular in some circles. Folks cite the maxim attributed to economist Milton Friedman that the only responsibility a corporation has is to make profit for its shareholders.

But wait – these are NON-profits! They do not HAVE shareholders! They do have Boards of Directors and (very) highly paid management teams, but they don’t pay taxes. Because they are non-profits! The reason that they don’t is because, under the law, they are expected to provide “community benefit”. While such systems often try to claim that they are doing so by occasionally sponsoring low-cost events such as health fairs where you can get your blood pressure or blood sugar checked, that is not what the requirement actually intended. The Times article correctly states “Nonprofit hospitals like Allina get enormous tax breaks in exchange for providing care for the poorest people in their communities.” That means taking care of people who have need, and not pursuing ANY of the gross collection tactics, not to mention refusing care. “But a New York Times investigation last year found that over the past several decades, nonprofits have fallen short of their charitable missions, with few consequences.” Put simply, these non-profit hospitals are given very large benefits (no taxes) because they are supposed to care for those with need, for the poor, but then they do not. But they keep the money.

These non-profit hospitals (and systems), run by finance people and accountants, operate as if they were for-profits, seeking to maximize income just as much as the for-profits do. Not having to pay shareholders, they can pay huge salaries to management, and accumulate enormous bank balances. In fact, this is an incredible competitive advantage – if you are a for-profit, you have to pay taxes! As a result, most for-profit hospitals in large urban markets cannot, and do not seek to,  compete with non-profits, and are found primarily in niche markets, for example in subspecialty hospitals providing particular kinds of procedural care to well-insured people.

Not that I am endorsing overtly for-profit health care. It is also slimy and disgusting, meeting some needs of some people and openly refusing care to others. The pursuit of profit and money is the root of the failure of our health system to do what most of us think it is there for: to improve health. However, non-profits operating in this sector get huge government (meaning taxpayer!) subsidy for doing – things that they do not do, do not want to do, and will take every legal (and often extra-legal) avenue to avoid doing. Indeed, in addition to not paying taxes they get great financial payments from other government programs, such as the 340B drug program, often worth tens of millions (see "Non-profit" hospital systems behaving worse than for-profits: No end to the scams, October 1, 2022).

If there is anyone left who is still taking evidence-free issue with the idea that the US health non-system is a failure at providing health, take a look at this recent piece from the Washington Post by Steven Woolf and Laudan Aron. Yes, it is an “Opinion” piece, but it is full of facts (see graphic) and backed up by the work of the National Academy of Medicine in its report “Shorter Lives, Poorer Health”. Since 1980, when the life expectancy of Americans was in the lower half of wealthy countries, it has slowly dropped so that by the early 2000s it was the lowest, and well before COVID arrived, had plateaued while that of other countries continued to rise. Almost all countries took a “life-expectancy” hit with COVID, but for most it was short-lived and has since rebounded. Except the US, where it has just started to drop a little more slowly.

 

Life expectancy is not the only measure of health system function or success. However, there is no accepted measure (deaths of middle-aged people, infant mortality, maternal mortality, years of productive life lost, etc. etc.) in which the US does not lag its peers, and often poorer countries. Unless you think the provision of boutique specialty care to wealthy people (including foreigners) is somehow a measure of health system success.

Woolf and Aron cite the National Academy report which lists a number of reasons why the US does poorly:

(1) unhealthy behaviors, such as our diets and use of firearms;

(2) inadequate health care and public health systems;

(3) poor socioeconomic conditions;

(4) unhealthy and unsafe environments; and

(5) deficient public policies.

They note the last is most important, including failure to address basic human needs for food, housing, education, and jobs. The continuing effects of racism. The failure to have an adequately funded public health infrastructure.

The National Academy did not look at the fact that our gangster-capitalist system has taken over health care as a cash cow to have money extracted and only incidentally (when convenient and profitable) provide health care, but this too is a clear failure of public policy.

If hospitals, non-profit or for-profit, are not providing all the health needs of our people, rich and poor, they must be forced to do so, by public policy. They should be provided with a negotiated, global, annual budget for operations (and a separate one for capital, so they don’t milk patients to make money to expand) by a national health system. And be held to it.

Addressing the problem of greedy hospitals, the pursuit of money rather than health, will not solve our health problems. Not only does it leave the other parasites, insurance and pharmaceutic companies, it leaves all the other societal inequities cited above, that also must be aggressively acted on.

But it is a necessary step, and a good start.