For Profit Exploitation of Hospitals

January 10, 2

Feb 10, 2023

Good Day Healthcare Advocates

I am so thankful for all of you and for the actions you take to move us towards a universal healthcare system. Some of the topics in work are:

The current state of healthcare providers and the potential impact of Universal Healthcare on them
How Universal Healthcare affects the insurance industry (it’s not what you think)
Rural healthcare challenges
Hospice Fraud revisited - this is worse than was reported

Please send topics to me via the chat button and I will research and report. If you need assistance in other ways, lectures, presentations, etc. Just let me know, I’m happy to help.

Current State - Exploitation of Hospitals for Profit

There is a problem with hospital closure in America. Often the claim is that the hospital is not paid enough for their services to stay open. Fair enough, no business can stay open and continue to lose money.

In the last decade about 100 rural hospitals have closed and there are at least 600 who are at risk today. They don’t have enough money coming in the door. Many times the hospital has the best interest of the community at heart and does everything they can to serve. They are just not sufficiently reimbursed and there are not enough patients with insurance for them to stay open. Of course, universal healthcare fixes that.

The Center for Healthcare Quality and Payment Reform, run by Harold Miller, an adjunct faculty member of Carnegie-Mellon, recommends providing a base overhead payment to hospitals to keep the doors open. There can still be “fee for service” charges, but much of the overhead of the facility is covered. That might work and in fact is a part of Pramila Jayapal’s Medicare for All Bill.

I want to address a different reason that some facilities can’t keep up with cost and that is caused by explicit exploitation.

Here is a link to a video (and transcript) and I highly recommend you watch/read it. The video describes the exploitation of the Wilson North Carolina Medical Center by private equity firm, Apollo. This firm literally squeezed every dollar out of it they could. For me it was quite an eye opener.

Quoting the video “Private equity firms are interested in extracting the most cash in the shortest time frame possible from the companies they buy out, not investing in patient care or anything else. Or better put, “the private equity business model is fundamentally incompatible with sound health care that serves patients.” And that incompatibility inevitably turns deadly.”

Apollo Global Management bought about 70 LifePoint hospitals, Wilson included in 2018 for $5.6 billion. Between 2010 and 2020 private equity firms spent $750B in American health care institutions.

Some of the techniques used are to create separate companies out of individual departments or services in the hospital and then charge internally for those services. Of course, all the companies are owned by the same overall owners. The land and building are put into a separate company and rented back to the hospital, housekeeping becomes a separate company and is paid by the hospital, same for the pharmacy, equipment and other services. All the services become their own little profit centers.

The purchase of Life Point by Apollo was financed by junk bonds. The high interest bonds increased the interest Wilson Medical Center was paying from $150M in 2017 to $578M in 2019. That money had to come from somewhere. It came from hospital budgets used to keep the facility running and patients healthy. When Apollo sold Life Point from one of its funds to another it accrued a $1.6B profit from investors. They may have been cheated too.

This acceleration of extraction of funds from the hospital has left it devastated. It may now have to close and the community of Wilson may have to do without. This is profit over patient care and human suffering is what really paid those dividends to the investors.

Not long ago most hospitals were nonprofits managed by a chief medical officer and were committed to serving their community. When they became for profit entities patients suffered. Until we have universal healthcare where hospitals are able to stand on their own because they have a base of funding that assists with their overhead, we need to make sure that hospital care only improves when new private equity investors take over.

What You Can Do

You can cut and paste the text below into an email to your state representatives and governor (see references for contact info) or use it in a phone call to them (feel free to personalize it) or use RESISTBOT to send an email to your governor and state representatives

RESISTBOT Text “SIGN POKUFA” to 50409

I am your constituent. It is often the case that when hospitals are sold services decline. This is especially true when the buyer is a for profit entity or a private equity firm. They seek to get a quick return on investment often by providing lesser services to their community and often at higher costs.

I want you to establish a state agency to ensure that when such purchases occur that hospitals at least maintain their current level of service to the community and do not overcharge for those services.