During COVID, Some Michigan Hospitals Made 100s Of Millions Of Dollars

Deep inside the article are hints of policy change desired by those interviewed.

I've marked the key words with bold font.

Both McLaren and Bronson are nonprofit health systems, but even hospitals that aren’t operated for profit are subject to what leaders in health care call the tension between margin and mission. Without money, it’s hard to do much good.

Citizens want nonprofit hospitals, in return for their tax-free status, to provide benefits to the communities and the people they serve, said Dr. John Ayanian, a primary care doctor and director of the Institute for Healthcare Policy and Innovation at the University of Michigan.

"They also have to generate enough margin to maintain their capital, their equipment, their buildings, to hire appropriate staff," he said. "So, we don’t want hospitals operating with deficits because of unpaid patient bills. But…they should not be generating huge profits or huge margins and financial reserves that are more for the benefit of the management team."

And it’s not hard to find those who think the balance has tipped too far toward making money.

"It’s hard to distinguish for profits and nonprofits, because there’s really no structure that demands it," said Dr. Vikas Saini, president of the Lown Institute, a nonpartisan think tank that advocates for health system reforms, including prioritizing healing over profits.

 

American hospitals make money on a fee-for-service basis, he said. The ones that can get the most people coming in to get the treatments with the highest profit margins will make the most money, which isn’t the same as serving the needs of their communities.

"There’s no sort of oversight about capacity, how much of which kinds of services a hospital can provide and spend money on and really be good at," he said. "And there’s no real reckoning with actual need."

Vivian Valdmanis, a professor at the School of Interdisciplinary Health Programs at Western Michigan University, said that part of the issues is “you’re bringing in businesspeople to run hospitals. In business school, you don’t learn how to give money away.”

Julie Fream, for example, is chairperson of the board for Corewell Health, the newly named behemoth born when Beaumont Health in Southeast Michigan merged with Spectrum Health on the state’s west side. She’s also the president and CEO of Southfield-based Original Equipment Suppliers Association, which champions the interests of automotive suppliers.

 

Martha Fuerstenau is board chair at Henry Ford Jackson Hospital. She is president and CEO of American 1 Credit Union.

 

McLaren Central Michigan’s chairperson is Doug Ouellette, a president for Mercantile Bank of Michigan.

 

Hospitals are not marketing to poor people, Valdmanis said. They are working to attract people with quality insurance, people who can pay. That’s is clear from the way they advertise. They do not boast about doling out charity care. They tout the quality of their services.

“As a paying person or a person with insurance, what’s more important to you, the hospital with all the latest technology or the hospital that’s generous to the poor population?” she said.

Consolidated, they come down to two main points: 

1. Hospitals (especially nonprofits) lack accountability to prioritize care for the poor. 
2. The traditional US fee for service system needs reform.

It's fairly easy to sense what comes next: "There should be a law!" Or in this case, probably at least two laws.

However, before anyone starts legislating, it's important to know some missing background. 

Take fee for service.

A frequent complaint is over-utilization, and the proposed solution is "value-based care." Unfortunately, this ignores the real cause of over-utilization (lack of direct pay for care) and doubles down on it by taking away even more patient control.

Value-based care transfers the decision about what is value over to insurance. In other words, it empowers health plans instead of patients. From a healthcare freedom perspective, this "cure" is worse than the disease.

What about hospitals serving the poor?

The fact is, hospitals do brag about their care of the poor. However, they brag where it counts - on their balance sheets. They submit uncompensated care totals to CMS, which gives additional reimbursement to qualifying Disproportionate Share Hospitals. So-called DSH payments are intended to equalize CMS reimbursement, which is lower than standard insurance.

And to give hospitals their due, marketing is not a proxy for service, as this article implies. Turning away patients has been illegal since EMTALA passed in 1986. No one needs to sell mandated services to the poor or anyone else. What they do need to sell in this era of shortages is quality, particularly the quality of elective surgeries - the kind most people expect insurance to pay.  

That said, nonprofit hospital accountability is still important.

But rather than doubling down on CMS rules or insurance's stranglehold on healthcare, here's a novel idea:

Bring accountability home.  Make each hospital's nonprofit status subject to a majority vote of the area it serves. 

There's no quicker way to see nonprofit hospitals go public and transparent about their care of the poor.