More Taxpayer Theft by Non-Profit Hospitals

I have discussed a couple of facets of the ride on which Americans are being taken as they have had the impression drilled into them that non-profit hospitals are these innocuous, charitable, caring organizations dedicated to the health of their patients and surrounding communities. I believe that many of the people who work in these facilities – doctors, nurses, radiology technicians, etc. – ARE truly dedicated to helping to restore health to the patients for whom they are caring. It’s the leadership of these facilities that, I would contend, have less than ideal motivations. And if their motivations are so altruistic why are they content to feed at the tax-exempt public trough while overcharging patients?

In my last post, I referred to a very notable article in Time Magazine by Steven Brill entitled, “Bitter Pill: Why Medical Bills Are Killing Us.” This article was HUGE when it was originally published in 2013. One of the the major points that Brill made was the extreme overpricing of medical services.

He used the example of a man who came to MD Anderson Cancer Center for cancer treatment. Although he had an insurance policy, it was not the kind that MD Anderson accepted, so this man was required to pay cash up front for his assessment and treatment.

Here are just a couple of examples of the money he was expected to fork out for his treatment because he was a cash patient.

  • According to Brill’s article, laboratory testing charges for this man totaled more than $15,000, and if he were old enough to be a Medicare beneficiary, Medicare would have paid MD Anderson only a few hundred dollars for those same tests.
  • Then the cost of the cancer drug to treat him – Rituximab- was billed to this patient at $13,702 for an injection of 660 mg. Brill explained that the average cost of the drug to hospitals in general was $4,000 for the same dose of the drug. Brill also mentioned that he believed the hospital probably got a volume discount for the drug which would have made the hospital’s cost closer to a maximum of $3,500, which means there was markup of approximately 400 percent for this lifesaving drug.

These are only a couple of examples Brill provided regarding the markups for services and medications that this cancer patient had to pay for in advance before receiving any treatment. However, Brill reported that while this unfortunate cancer patient was being milked for his lifesaving cancer treatment, MD Anderson Cancer Center, which is a “non-profit” institution, managed to take in a “profit/surplus” of $531 million in one year.

Although, I am not sure I agree with all of Brill’s conclusions in this article, I would strongly agree with this statement by him.

“Taken as a whole, these powerful institutions and the bills they churn out dominate the nation’s economy and put demands on taxpayers to a degree unequaled anywhere on earth.”

In another article entitled “The Five Things Hospitals Don’t Want You to Know About Obamacare,” by Nigel Jaquiss, that ran on April 12, 2016 in the Oregon publication “Willamette Week,” the majority of Oregon hospitals are non-profit. However, they are making huge “profits/surpluses,” whatever you want to call them. The article reports that Providence Health & Services has managed to accrue $5.8 billion in cash reserves.

This article quotes a representative of the Service Employees International Union Local 49 as saying the union would prefer that rather than stockpiling all that cash, the health system would lower its prices, improve access and the quality of its services. Wow! I agree with a union. Will wonders never cease?

I never tire of pointing out that the hospitals with these “profits/surpluses” are non-profit and tax-exempt. Is this right? Is this good for our country? I would say “no.”

My question is – what would happen if non-profit hospitals lost their tax-exempt status? Would they continue to overcharge and rack up huge surpluses or would they be forced to lower their prices for patient care? I think it might be worth a try. After all, look how much they have been getting away with, and at the expense of taxpaying citizens.

Sources (and further reading):

http://www.uta.edu/faculty/story/2311/Misc/2013,2,26,MedicalCostsDemandAndGreed.pdf

http://www.wweek.com/news/2016/04/13/the-five-things-hospitals-dont-want-you-to-know-about-obamacare/

Image courtesy of canstockphoto.com.

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