The Center for Medicine in the Public Interest takes a free market approach to health care issues in general and they pile on to my pointing at hospitals and the large health systems they are part of as the main driver of rising health costs, and they call out non-profits in particular for their egregious abuse of that status. Their focus is New York hospitals, but it is the same everywhere. I am particularly fond of their recognition of the executive compensation issue, which I have banged on for a long time. This is literally billions and billions of dollars in inappropriate compensation in non-profit, tax-exempt institutions. Some CEOs are being paid over $10 million dollars and these ding-dongs build huge administrative staffs that they also overpay. Meanwhile they are laying off clinical workers and other necessary staff.
The hospitals are also failing to meet their uncompensated care obligations and refuse to serve Medicaid patients. Many of these “non-profit” hospitals had profits of over $100 million, with one being well over a billion dollars. They aggressively pursue poor patients to collect unpaid bills. They waste money on advertising and marketing to get high-paying commercial patients. They collect immense charitable contributions. They build marble and exotic wood palaces to celebrate the money they are ripping off from the public. And of course, they make tens of millions of dollars in campaign contributions to prevent any action from being taken against them. (CMPI Paper)
The solutions are obvious:
- Break up the large non-profit hospital systems and force divesture of physician practices and other provider types.
- Put substantial caps on executive compensation; no more than something like $250,000 for the CEO. That will put downward pressure on all management salaries.
- Ban marketing and advertising by non-profit hospitals.
- Force compliance with obligations to treat the poor. All charitable contributions must go to that purpose.
- Ban fancy buildings and structures.
- Ban profits in a non-profit organization.
We can save hundreds of billions of dollars by ending the non-profit hospital scam and that is exactly what it is.
If the general public every got to see the egregious hospital bills that these “non-profits” send out they would be astonished at the least. Mortified is more likely. It angers me to see $30M, $40M, and yes even $50M hospital bills since the passage of the Unaffordable Care Act. It would seem like there should be a public data base that collects this type of information.
But as you point out, they play the political donation game well. They buy up a vacant space in a strip mall or elsewhere and open up a clinic and the local politicians trip over themselves to be there for the ribbon cutting ceremony. The former Governor from your State, Tim Pawlenty, was the first politician I heard speak about this almost 20 years ago. Your suggested actions are spot on, but the case needs to be won in the court of public opinion first. Time to start educating the public about the real drivers of rising health insurance premiums.
Saw
I definitely agree that hospital revenue is too high. Though I think that is a function of the health insurance companies not reeling in costs in a manner that is control by normal supply and demand constraints. (employers too willing to eat the additional health care premiums perhaps? though out side my pay grade)
I agree that section 501(c)(3) is far too expansive which allows for “profit entities” to operate as entities exempt from income tax. Section 501(c)(3) provides that entities providing health care qualify for tax exempt status. It would be a good amendment that 501(c)(3) entities had a limitation on entities that are in reality for profit entities.
There is provision that tax exempt entities can not innur a benefit to private individuals which would include excess compensation. Though that is difficult to enforce. There are additional penalties for prohibited transactions, which would include excess compensation. I recall section 4797 , though I am not going to look it up at this time.
your comment on divestiture is a good suggestion. The insurance companies, hospital groups etc have created an environment that is essentially monopoly control, so the price competition really no longer exists. Something similar to the ATT and Standard oil breakup would be appropriate.