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Hospitals Made Out Like Bandits During the Epidemic, Because They Are

By May 14, 2023Commentary

I have worked in health care my entire adult life, providers, payers, product makers, I have pretty much seen it all and am still actively involved.  Like every other industry, there is a lot of greed in health care and a lot of excessive executive compensation.  Most large health systems, which provide almost all the actual health care in the US today, are non-profits, supposedly.  But they have consolidated and use their market power to charge outrageous prices. Why?  Well, in large part so they can pay management absurdly large pay and benefit packages.  Some CEOs of these nominally non-profit systems are paid tens of millions of dollars a year.  So don’t believe any whining you hear from them about how their systems are not reimbursed adequately for the care they provide.  Pay yourself and other managers less, cut the administrative bloat and stop spending money on marketing and advertising and you could easily cut prices.

This analysis reveals how much money the large health systems made during the epidemic.  They got all kinds of free money from the feds, including special payments for treating CV-19 patients, which meant they made sure everyone had a CV-19 infection by the time they left the hospital, even if they didn’t come in with one.  Look at the prestigious institutions covered in the story, look at the details on the huge amounts of CV-19 aid they got, what they pay their executives, and ask yourself if reforming the literal health systems providing our care couldn’t save a lot of money for everyone.  (OB Story)

Join the discussion 2 Comments

  • John Oh says:

    You are right, but be careful what you wish for. Reform doesn’t always mean better. Also what you describe in health care is happening in most of the private sector as things consolidate around a few big winners. Banking is a recent example, but tech, meat packing, university administration and many others are seeing the same consolidation and centralization. Real competition would cause a lot of change especially the exorbitant salaries and administrative bloat. Maybe too late.

  • Ann in L.A. says:

    You’re missing a big driver of consolidation: the federal government. Since Obamacare, vast amounts of red tape has been added and the reporting requirements have skyrocketed, plus there is the increasing burden of time spent negotiating with insurance companies and peer-to-peer begging to get patients’ care paid for. All that has driven small, independent practices out of business–often by selling themselves to the big guys.

    Instead of lots of small options competing for business, the feds assumed two things: 1) economies of scale is a thing (all it actually does is multiply the bureaucracy) and 2) that fewer, larger healthcare providers are easier for the government to control (true, and that’s the point.)

    More and more providers are going to either the big guys or going to cash-pay concierge service.


    California hospitals also have a sword hanging over their heads: the requirement to retrofit every patient building for higher earthquake codes in the next 7 years. Entire hospitals are being torn down and rebuilt. Cedars-Sinai is building a new patient tower which they will use while the older towers are being refitted ( ). Overall, the higher codes are a good thing, but it’s a lot of money.

    Estimates are that the entire bill for the retrofit, California-wide could be $143 billion. Given the inevitable cost overruns, I’d assume that even that high estimate is under-estimating the final costs. ( )

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