Friday, March 8, 2013

Profits and Hospital Systems.

The American Hospital Association has come out with a rebuttal to Steven Brill's Time Magazine article.  Brill had claimed that non-profit hospitals operate at a 11.7% profit margin.  According to some internal AHA survey, the actual number may be closer to 5.5%.  In the context of typical corporate profit margins, this adjusted number does not exactly make one weep for the hospital industry.  To wit, according to recent industry trends, even a 5.5% profit margin out-performs private stalwarts like the auto manufacturing industry, major airline carriers, textiles, heavy construction, and even the tobacco industry.     

I mean, the hospitals aren't raking in 25% profits like real estate investment trusts, but 5.5% isn't too shabby.  They do just fine.  CEO's of places like the Cleveland Clinic and Mayo and Johns Hopkins earn well over seven figures.  Even mid-level hospital executives usually take home twice or three times as much as the salaried docs who actually take care of patients and make sure all the billing information is filled out appropriately.

Are we OK with hospital systems who don't pay a cent in federal or local taxes generating bottom lines that American Airlines would take in a heartbeat?  This is not merely a question of pragmatics--- i.e. whether or not, given the exploding cost curve in the health care sector, it is feasible to expect hospitals to remain so profitable with their million dollar robots and Renaissance Hotel-esque entrance lobbies and 42 inch flat screen TV's in every room and outrageous facility fees and $18 charges for two Tylenol pills. 

The question, like it or not, transcends pragmatics.  It is the defining moral question of our time...


Anonymous said...

Need Congress to pass a very simple law.

"Any line item on an hospital bill may not exceed 5% above the average receipt for the same item over the last 90 days, excluding non-payment write-offs."

They have price controls for electricity, natural gas, and cable TV. No reason for Hospitals to escape common sense scrutiny.

Paracelsus said...

"It is the defining moral question of our time..."

You have dotted the "i" on this issue. From a moral standpoint healthcare should not aim for profit. It should generate revenue to cover its costs, including keeping the staff happy, and that should be its greatest priority - all million dollar scanners and robots are worthless without the humans operating them.

I often dream about times when doctors and nurses could do 4-6 hour shifts a day, because there would be so many of them, and the system affords to pay them all. Well rested, happy, eager doctors. Work 4-6 hours a day, handover, go out and study and have a life, come back tomorrow with unmatched enthusiasm for work. This could actually happen, the money is there. But society chooses to look at healthcare as business, and that'll be the downfall of both society and healthcare, mark my words.