"Non-profit" hospital chains join for-profits in destroying our health system

The New York Times’ latest exposé on the despicable actions of large, ostensibly “non-profit” health systems, ‘How a Sprawling Hospital Chain Ignited Its Own Staffing Crisis’, examines Ascension Health, one of the largest such systems in the US. It is definitely worth reading, although you may want to try deep breathing first. Ascension owns hospitals over a wide area of the US, mainly in the Midwest, and took a bow in 2019 when it “was trumpeting its success at reducing its number of employees per occupied bed, a common industry staffing metric”, saving $500M! Unfortunately, cutting the number of employees to bare bones limited the quality of care available to patients. And when the COVID pandemic hit, and occupancy rates skyrocketed, they were woefully understaffed – except that the woe was experienced by the patients who sought, and to one degree or another, received care in those hospitals. It was and remains a disaster. Among the impacts cited in the article: at one hospital “there were so few nurses that psychiatric patients with Covid were left waiting a full day for beds, and a single aide was on hand to assist with 32 infected patients”; at another “Chronic understaffing meant that patients languished in dried feces, while robots replaced nursing assistants who would normally sit with mentally impaired patients.” Think about that patient being your parent! Disgusting? Upsetting? Dangerous? How about downright evil?

But, you might think, the cost cutting was necessary. After all we read about hospitals that are on the brink, are barely surviving, needing government bailouts to keep serving their communities. Oh, wait, those are different hospitals. Those are rural safety net hospitals. Ascension has $18 Billion in the bank. $18 Billion! In a “non-profit” hospital system! Boy, I’m sure that those C-suite execs who oversaw that got big 7-figure bonuses! And now? With that much in the bank, I doubt they are going to suffer much just because people are getting terrible care and dying in their hospitals.

So how are these systems non-profit? The Times does a good summary:

In exchange for avoiding taxes, the Internal Revenue Service requires them to offer services, such as free health care for low-income patients, that help their communities.

But…

The Times this year has documented how large chains of nonprofit hospitals have moved away from their charitable missions. Some have skimped on free care for the poor, illegally saddling tens of thousands of patients with debts. Others have plowed resources into affluent suburbs while siphoning money from poorer areas. And many have cut staff to skeletal levels, often at the expense of patient safety.

Oh. That doesn’t sound so good. And, to be sure, Ascension is far from the only “non-profit” hospital chain to behave in this manner; most of the big and “successful” ones do so. The West’s Providence Health System, the focus of a previous Times exposé and post on this blog ("Non-profit" hospital systems behaving worse than for-profits: No end to the scams”, October 1, 2022), ironically started by a group of nuns to care for the poor and underserved, also gets coverage in this article.

There is so much evil here it is hard to know where to start. Certainly, a key part is running networks of institutions ostensibly created to heal the sick and injured (“hospitals”) as if they were manufacturing businesses and employing au courant management strategies designed for manufacturing, such as “just in time” supply chains and cutting staff down to the bone. This is absurd; hospitals, to be effective, to be able to meet regular seasonal changes, not to mention disasters or pandemics, need to have excess capacity at all times. Running “lean and mean” is wrong on many levels. It is exploitive of the staff, and indeed puts staff in the position of providing poor-quality care to their patients, compromising their professionalism and commitment; the testimonies of the nurses at Ascension are the most damning part of the report. It makes it difficult to impossible to gear up in times of need. And it um, kills people. You cannot have a potential staff of on-again-off-again health care workers to be employed just when needed “just in time”. If you could, if such excess capacity existed in the society, it would be yet another sign of perversion, of oppressing people and their families and communities to make more money – profit for “non-profits”.

Another way that this is, to put it gently, inequitable, is described in the Times article: cutting back on services in high-need-but-low-income communities and reallocating them to wealthier neighborhoods. And, of course, emphasizing and marketing high profit-margin services (cancer care, orthopedics, neurosurgery, cardiac interventions). Again, a  morally bankrupt strategy to meet not the health needs of our country but rather the dollar desires of a board of directors!

So what do I have to add to the excellent coverage given to this issue by the NY Times? They even call it “Profits over Patients”, which it is. I think I can give the problem a name that the Times will not: Capitalism. Capitalism is the problem. And it is not just any capitalism, it is not the capitalism of mom-and-pop stores or small businesses or making a reasonable profit, it is the capitalism-run-amok, it is the capitalism of anything-for-a-buck, full-speed-ahead, don’t-care-who-gets-hurt, bigger-is-better, I-want-to-be-a-billionaire-too that we have seen increasingly over the last decades. It is the capitalism that Noam Chomsky calls “gangster capitalism”, but in many ways what these folks do worse than what gangsters do, because it threatens not only people but all of our society. Sure, a gangster may threaten or even kill you. These systems are designed in a way that will kill thousands! But you know what? That is capitalism, that is the end point of capitalism. That is the Gordon Gekko, greed-is-good, result of capitalism that is not only unfettered by government regulation (especially with the elimination of many of the best parts of the New Deal) but that is actively enabled by a government that is willing to let private companies take all the profits when they make them and bail them out when they lose. And it is arguably even more evil that the hospitals described in the Times article are large “non-profits” which behave exactly like for-profits except that they don’t pay taxes! Who would have thought I’d be arguing for for-profits? Well, I’m not; they actually providing even worse care for the community because there are almost no regulations governing what they do. But at least they pay taxes.

So what can be done? A great deal actually.

•  Ban for profit corporations, or any entity controlled by private equity, from health care delivery. Yes, hospitals, but also clinics, urgent care centers, nursing homes, etc.
• Require not-for-profit entities to behave like non-profits are supposed to, with community benefit being the SOLE criterion by which they are judged. Do not allow building of facilities, expansion, or the dissolution of “product lines” except when it can be demonstrated that this will benefit the health of the overall community. Not allow “we’re moving into/building into this prosperous expanding suburb because, you know, they will need health care” if it means there will be inadequate resources to serve the people in the most needy, sickest, and poorest communities. No cannibalizing inner-cities to feed wealthier suburbs. And while it may not be possible to directly regulate the income (salary and bonuses) of C-suite executives of non-profits, the requirements should ensure that they cannot make loads of money and build huge reserves ($18 billion! Come  on!) If they won’t do this, tax them
  
• ·Ensure that the communities most in need, especially in rural areas, have their needs met on a case by case basis. The absurd Hobson’s Choice the federal government is offering rural hospitals, crystallized in the headline of the article cited in the second paragraph, “A Rural Hospital’s Excruciating Choice: $3.2 Million a Year or Inpatient Care?” must be changed so that each hospital, and the larger community it serves (sometimes geographically enormous) gets support for what it needs, inpatient care, outpatient care, and usually both.

Even better, while eliminating private for-profit ownership, discourage misbehavior by non-profit owners by creating and implementing a single payer health system, such as Medicare for All, which as the sole payer would be able to with and regulate these health systems for the benefit of the health care of the people of our country.

Health care systems should not be run for profit, but rather for people's health

I wrote in a recent blog (“How can a health care system lead not to ruin but to, actually, health?”, December 28, 2013) that our health care system ”…is a parallel to our financial services industry: private enterprise is given a license to make money from everyone, and the government finances it. The only difference is that for financial services, the government steps in to bail them out only after they have already stolen all our money, while in health services the profit margin is built in from the start.” A recent article in the New York Times, “Hospital chain said to scheme to inflate bills”, by Julie Creswell and Reed Abelson (January 24, 2014) takes this a bit farther.

Discussing the Department of Justice’s decision to join several whistleblower (“qui tam”) lawsuits against the for-profit hospital chain HMA (not to be confused with the nation’s largest, HCA) for aggressive policies that seek to maximize profits by “encouraging” (at threat of termination) doctors to over-admit patients, they quote Sheryl R. Skolnick from CRT Capital, who wrote “Investors seem to think that D.O.J. investigations, qui tam suits and allegations of serious Medicare fraud are simply a cost of doing business.” That’s right. Illegal activity has a price – fines – but the fines are small enough that they do not discourage the illegal activity. The authors write “Many settlements run only into the tens of millions of dollars. That’s a corporate slap on the wrist for companies whose stocks typically soar when executives push the profit envelope. Only if the penalty is at least $500 million, Ms. Skolnick said, are corporations likely to find the cost a deterrent.” Or, of course, if the heads of these corporations are sent to prison, but in another parallel with the financial services industry, this is not happening. Not to Lloyd Blankfein of Goldman Sachs or other financial titans (such as CEO Jamie Dimon of JPMorgan, featured in the same issue of the Times, “JPMorgan, fined billions, approves raise for its chief”!), or to Rick Scott, former head of Columbia/HCA when it was fined $1.7 billion in 2003 for massive Medicare fraud). Scott, of course, is now the Governor of Florida.

It is difficult to imagine the hubris and arrogance of the “masters of the universe” who run the financial services industry, or the large hospital corporations. At least, it is for me, and possibly for other people who believe that the health care system should be first, second, third, and last about benefiting people’s health. It does not seem to be for the C-suite executives of even moderate-sized hospitals, who often come from accounting and finance backgrounds. The argument is that if there is “no margin” there is “no mission”, and that in the competitive environment of health care it is necessary to have good business managers to make it possible for a hospital – or hospital system – to even survive, not to mention to prosper.

Good management is important. Good management means the ability to run an organization efficiently, to create effective systems and effective working relationships, to enhance quality and limit unnecessary costs. It is absolutely necessary to build a system that is about benefiting the health of people. This includes financial knowledge and financial management ability. But increasing profit, increasing market share, taking “desirable” customers away from “competitors” has no such place; the health system has no business in being organized in such a way that these things are even possible.

This statement is so completely at odds with the way the health system is currently structured that it bears repeating. There should be no financial incentive for competition in health care. There should not be more services available than a community needs because every hospital wants to provide it and take “customers” from their competitors. If, for example, a community is large enough that it needs one MRI scanner, there should be only one (or 2, or 3, or whatever the medical need is). In the current structure, however, the hospital with that one would have a competitive advantage over other hospitals in the community, so everyone needs one. The same is true for any profitable service: cancer treatment, heart procedures, neurosurgical procedures, etc. Profitable “product lines” are, thus, in oversupply, and this means that they are overused, often with risk to the recipients, and certainly the cost to everyone is increased. Conversely, necessary services that are not profitable, such as burn and trauma care, are rarely in oversupply, frequently relegated to the community’s public hospital, and sometimes not available at all.

A community should have all the health care resources its people need, but should not duplicate – and triplicate – services so each can compete. It is bad in terms of the overall cost, and the oversupply of profitable services, and it is arguably worse in that all these hospitals are competing to get the same patients – those who are well-insured with “high profit” diseases, and to not care for others – uninsured, poor, and those needing services that are not well reimbursed.

This is craziness. Health care is not luxury condominiums, or expensive watches. It is something that every single person should get all of that they need, and no one should get what they do not need. There should be competition between hospitals to be excellent, and measures of excellence should include comprehensiveness, quality, cost-effectiveness, and caring for everyone equitably (not equally, but based upon their health care needs). And, if there are to be financial rewards, they should come for doing this well. There must be no services that are particularly “high-profit”, nor patients whose economic status makes them “undesirable”.

We have a long way to go. Various strategies have been tried in the past, from certificate of need (CON) programs that decided whether a community needed a new pieceof capital equipment in the 1970s and 1980s, to disproportionate share funding for hospital caring for higher percentages of uninsured people and quality improvement organizations more recently. But all of these efforts have been gamed, because there was no comprehensive plan in place to ensure that no patient, and no disease, was more or less profitable than another. We need to have a system in which each person with a health care problem is provided the care that they need. No gold cards. No profitable conditions. Not hard to understand.

The time for this to happen is now.