Healthcare
An article from Time Magazine is making the rounds, pointing the finger at the profit motive of non-profit hospitals, and of healthcare insurers as the reason the U.S. healthcare system is such a mess. It is one of the causes of the problem. But the article is misleading, contains inaccuracies and worst of all, is incomplete.
If they had taken a look at one particular local non-profit hospital, this is what you'd have seen. "In 2010, Children's Hospital of Los Angeles's non-profit tax return showed that their revenue after expenses was over $122 million. Looks egregious, although they aren't paying any of their employees salaries and benefits in excess of $1 million, as shown in the article at other non-profit hospitals.
The article would leave out the results for 2009. CHLA's revenue after expenses that year was -$34.6 million. For 2008, -$50.1 million. So while there was a year that they showed a large surplus, it was almost completely offset by the deficits of the two prior years.
But what really bugged me about this article was what wasn't there. It doesn't mention EMTALA. In case you're not familiar with EMTALA, you might want to read this.
http://en.wikipedia.org/wiki/EMTALA
The same Consolidated Omnibus Budget Reconciliation Act that gave us COBRA to continue health insurance after leaving an employer, also gave us EMTALA. Put simply, this law mandates that any hospital emergency room must screen all patients that enter, and if they require emergency treatment; provide that treatment without regard to their ability to pay. That doesn't mean emergency rooms need to give out aspirin and cough syrup to people with the flu. But it means that if someone who has the flu were to spike a temperature of 106, then the emergency room has to treat them to save their life.
So who pays for this? Not the government. At least not all of the time. Many of the people who go to emergency rooms and have no health insurance may have, or qualify for, Medicaid (Medi-Cal here in California). But for those who don't, hospitals just have to 'eat' the bill. They can try to collect, but you can't get blood from a stone. That's why some people who run up huge bills pay small amounts on a monthly basis for the rest of their lives.
Are hospital billing methods and practices Byzantine? Absolutely. Wouldn't it be a lovely world if every hospital charged more or less the same amount for the same procedure in a geographic zone? I wouldn't expect Cedars-Sinai to charge exactly the same as Little Company of Mary-Torrance, but their charges shouldn't be all that different in an ideal world.
Hospitals create billing amounts, knowing that they will offer insurers with whom they have contracts deep discounts on those amounts. Cash patients who can afford it make up for part of the costs mandated by EMTALA when they pay those inflated charges. But some hospitals are now charging less for those who pay cash, because the hospital doesn't have to deal with the expense of documenting and billing insurers to get reimbursed.
Should hospitals that are non-profits not make surpluses year after year? Absolutely. But since they do suffer deficits on occasion, surpluses aren't as evil as this article in Time tries to make out. Are the people who run these non-profit hospitals paid well? Sure. How much private industry hospitals that aren't non-profits pay isn't public record; however, it's almost a certainty it isn't less than non-profits are paying. Doctors are doctors, health-care administrators are health-care administrators.
The University of Southern California runs two hospitals, has more than 500 physicians who are faculty members practicing medicine in L.A., and is a gigantic non-profit with more than $3 billion in annual gross revenues. The two most highly paid employees of this non-profit are the Chairman of the Cardiothoracic Surgery Department, and the football coach. The university president ranks third in total compensation. Do you think that if any of these three were to go to work for a for-profit entity they would be paid any less?
Prime Healthcare Services has grown to 18 hospitals in California and three other states. They are a for-profit entity and their approach to making money is to get rid of those services that don't turn a profit. They don't sign contracts with insurance companies. There are some who think they are making profits at the expense of reducing the quality of patient care. The problem with that argument is that in the most recent list of the Top 100 hospitals in the U.S. compiled by Thomson Reuters contains five of the 18 Prime hospitals.
Profit motive is only one reason why our healthcare system is broken. The problems are more complex and inter-related than this Time magazine article makes out.
If they had taken a look at one particular local non-profit hospital, this is what you'd have seen. "In 2010, Children's Hospital of Los Angeles's non-profit tax return showed that their revenue after expenses was over $122 million. Looks egregious, although they aren't paying any of their employees salaries and benefits in excess of $1 million, as shown in the article at other non-profit hospitals.
The article would leave out the results for 2009. CHLA's revenue after expenses that year was -$34.6 million. For 2008, -$50.1 million. So while there was a year that they showed a large surplus, it was almost completely offset by the deficits of the two prior years.
But what really bugged me about this article was what wasn't there. It doesn't mention EMTALA. In case you're not familiar with EMTALA, you might want to read this.
http://en.wikipedia.org/wiki/EMTALA
The same Consolidated Omnibus Budget Reconciliation Act that gave us COBRA to continue health insurance after leaving an employer, also gave us EMTALA. Put simply, this law mandates that any hospital emergency room must screen all patients that enter, and if they require emergency treatment; provide that treatment without regard to their ability to pay. That doesn't mean emergency rooms need to give out aspirin and cough syrup to people with the flu. But it means that if someone who has the flu were to spike a temperature of 106, then the emergency room has to treat them to save their life.
So who pays for this? Not the government. At least not all of the time. Many of the people who go to emergency rooms and have no health insurance may have, or qualify for, Medicaid (Medi-Cal here in California). But for those who don't, hospitals just have to 'eat' the bill. They can try to collect, but you can't get blood from a stone. That's why some people who run up huge bills pay small amounts on a monthly basis for the rest of their lives.
Are hospital billing methods and practices Byzantine? Absolutely. Wouldn't it be a lovely world if every hospital charged more or less the same amount for the same procedure in a geographic zone? I wouldn't expect Cedars-Sinai to charge exactly the same as Little Company of Mary-Torrance, but their charges shouldn't be all that different in an ideal world.
Hospitals create billing amounts, knowing that they will offer insurers with whom they have contracts deep discounts on those amounts. Cash patients who can afford it make up for part of the costs mandated by EMTALA when they pay those inflated charges. But some hospitals are now charging less for those who pay cash, because the hospital doesn't have to deal with the expense of documenting and billing insurers to get reimbursed.
Should hospitals that are non-profits not make surpluses year after year? Absolutely. But since they do suffer deficits on occasion, surpluses aren't as evil as this article in Time tries to make out. Are the people who run these non-profit hospitals paid well? Sure. How much private industry hospitals that aren't non-profits pay isn't public record; however, it's almost a certainty it isn't less than non-profits are paying. Doctors are doctors, health-care administrators are health-care administrators.
The University of Southern California runs two hospitals, has more than 500 physicians who are faculty members practicing medicine in L.A., and is a gigantic non-profit with more than $3 billion in annual gross revenues. The two most highly paid employees of this non-profit are the Chairman of the Cardiothoracic Surgery Department, and the football coach. The university president ranks third in total compensation. Do you think that if any of these three were to go to work for a for-profit entity they would be paid any less?
Prime Healthcare Services has grown to 18 hospitals in California and three other states. They are a for-profit entity and their approach to making money is to get rid of those services that don't turn a profit. They don't sign contracts with insurance companies. There are some who think they are making profits at the expense of reducing the quality of patient care. The problem with that argument is that in the most recent list of the Top 100 hospitals in the U.S. compiled by Thomson Reuters contains five of the 18 Prime hospitals.
Profit motive is only one reason why our healthcare system is broken. The problems are more complex and inter-related than this Time magazine article makes out.
posted by me at 9:19 PM
<< Home