In my last post, I tackled the issue of profit in health care because this is among the main talking points when people say that the United States needs to have a single payer “health care” system so that the profit motive is removed. They mistakenly believe that such a system will guarantee access to medical care for everyone, usually using the reasoning of greed in the delivery of health care.
I have some news for these people though. I have written about this issue in previous posts, but I think it bears repeating in this context. The United States has a majority of “not-for-profit” hospitals, which are tax-exempt because they are supposed to provide charity care. According to statistics from the American Hospital Association (1), there are 2,845 “non-government not-for-profit” hospitals in the United States. The same statistics also report that our country has 1,034 investor-owned “for-profit” hospitals.
So, here is a question … if the country has more than twice the number of “non-profit” hospitals than we have “for-profit” hospitals, why are medical care costs so high?
I have a dirty little secret for you – a large number of our “non-profit” hospitals are raking in HUGE profits.
I refer to an article about Oregon “non-profit” hospitals in The Willamette Week. It is entitled “The Five Things Hospitals Don’t Want You to Know About Obamacare,” written by Nigel Jaquiss (2). He reports that Oregon’s 60 “non-profit” hospitals are taking in windfall profits. According to this article, Providence Health & Services has stockpiled $6 BILLION in cash reserves.
Isn’t this a little over the top for a “non-profit organization?”
The fundamental purpose in giving “non-profit” hospitals tax-exempt status is that they, in return, would benefit the community where they are located by providing charity care for people who cannot afford the medical or surgical services they require. Apparently some county tax assessors are getting wise to this scam though because three Illinois hospitals were stripped of their tax-exempt status in 2011 because they were not providing a sufficient community benefit. (2)
Unfortunately, far too many “non-profit” hospitals continue to extract exorbitant fees from patients’ commercial insurance policies while raking in whatever Medicaid pays for patients who would have been their charity cases before Obamacare’s Medicaid expansion became effective in Oregon.
You may ask: “How do these ‘non-profit’ hospitals use the huge profits/surpluses they amass?
First these hospitals pay their executives VERY WELL For instance, the Willamette Week article reported Providence’s tax filings reveal that nine of its employees were paid more than $1 million per year while another 27 of them earned at least $500,000 per year with most of these high earners being administrators.
Additionally, Oregon hospitals have been buying up doctor’s groups and other medical facilities that were “for-profit.” Then they also spend millions on building rehabilitation. For instance, Providence is forking out $85 million to give its St. Vincent Medical Center a “face-lift.”
I’m sorry, but I just have to comment here. Can you imagine the people with medical issues, who might also have financial challenges (maybe even being just temporarily out of a job), who could be materially helped by even half of that $85 million? Yet now that Obamacare has resulted in a Medicaid expansion in Oregon, tax-exempt “health care” systems like Providence are raking in bucks from paying Medicaid patients and yet putting out very little in community care.
If this is what NOT MAKING A PROFIT is all about, I think I will choose good old-fashioned HONEST profit.
The doctor for whom I worked for two years (and now serve as an independent contractor) does his best to make his surgical services affordable by offering cash prices to the uninsured or self-insured employers that are half the price a hospital would charge, and people in my community have told me that he provides charity care, but that is not something he advertises.
Not to belabor this, but there are also Direct Primary Care practices that continue to gain traction. They are third-party free (which means they DO NOT accept any insurance). Yet they offer a full spectrum of routine care for a very low monthly membership fee as well as additional services for very reasonable fees. Ironically these kind of practices (along with low-cost, price-transparent surgery centers and dermatology practices) are for profit.
I ask you. Which is best – those people who amass large amounts of money that does not even get taxed or provide much in the way of community benefit and yet act “holier than thou” because they are supposedly “non-profit” or those who actually make a living profit from their work in the medical field with reasonable pricing and charitable hearts to help people without being paid when it is needed?
Sources for More Information:
*This is the last post in my series regarding Single Payer Fallacies – for now. I strongly felt I had to tackle these typical arguments that so many people give for why our country should establish a single payer system, which do not hold water as far as I am concerned.
Now that the heat is really on the Senate to pass a bill repealing and replacing Obamacare, I need to go back to refuting the arguments against doing that. I think my next post will be about refuting the phony CBO estimates of the effects of replacing Obamacare with a more free market policy for medical and surgical care delivery. If you want to come along for the ride, please subscribe to my email list; the form is at the upper right of this post. Then you will automatically receive any new posts in my blog every Thursday morning.
I am also working on a report about the history of “health care,” or I should say the delivery of medical surgical care in this country, to provide education and some context as to where we are now.