It’s because of the unintended consequences, of course.
In their regular column in Slate, physicians Zachary Meisel and Jesse Pines talk about the recent attention that non-profit hospitals are garnering. The problem is this. Many are acting like for-profits, and in some cases, have been caught mistreating the uninsured and those who are on Medicaid.
So, when money is tight, you hear stories like this one a few weeks ago in the Boston Globe, which takes another shot at their favorite target, Partners HealthCare.
But threatening the tax breaks of non-profit hospitals can backfire. For instance, they can simply respond by simply cutting their losses and declaring themselves for-profit. And the results would be disaster to patients. Indeed, as Drs. Meisel and Pines write, “By discontinuing the ‘community benefit’ charade, they could choose to serve only those with good insurance and diseases that reimburse well. For-profit specialty hospitals don’t have all-purpose E.R.s to service the community, nor do they maintain unprofitable services such as general medicine and psychiatry. This would clearly reduce access for many patients who need hospital services for serious but low-paying conditions: diabetic complications, congestive heart failure, pneumonia, severe schizophrenia. Driving nonprofit hospitals to become for-profit specialty hospitals probably won’t improve the population’s health.”
Again, regulation brings the specter of unintended consequences, which always has the potential to make the situation worse than it already is.
Related posts:
- From nonprofit hospitals to "profit machines"
- Not-for-profit vs for-profit hospitals
- Are hospitals purposely causing a PCP shortage?
- Transfers and bad hospitals
- Hospitals banning cellphones for profit?
- Are all for-profit health care companies evil?
- Charity hospitals cherry-picking patients?
{ 1 trackback }
{ 10 comments }
I agree that there is a danger and a potential for more harm by getting rid of tax breaks for non-profits. I have on my blog an article about how I think the payment structure for medicare (and thus all of healthcare) for hospitals needs to be altered to better serve communities-and continue to be viable. http://drbrenner.blogspot.com/2009/06/medicare-reform-part-4-new-model-for.html
Essentially, I want to subsidize all hospital for their material costs of keeping beds open. Open beds = service for community. In current reality, open beds = lost money. We shouldn’t be paying on a patient basis, but on a bed basis. The government then would regulate numbers of beds based on needs to communities.
Every hospital profit or nonprofit will be paid the same. And if for-profits want extra revenue, they’ll have to have value-added services paid for by patients themselves. The biggest change I have is that hospitals who don’t meet standard quality guidelines (e.g. low nurse-to-patient ratio, and low nosocomial infection rates) will get fined or simply reimbursed less. There will be added value payments to hospitals who do more for quality measures.
You raise a good point. In my article I did not address the tax status of non-profits versus for-profits. There could be a very specific minimum “service to the community” criteria that differentiates true non-profits from “fake non-profits.” That way we don’t force out the non-profits, but not allow the abusers to continue to get tax savings without service to the community (e.g. like you mentioned-psychiatry services, or trauma center status)
Kevin, I sincerely hope you do not delete this comment.
It has been my experience over the last ELEVEN years that “non-profit” hospitals (and their executives) – especially in my home-state of North Carolina – suffer virtually NO effective oversight of ANY kind by state or Federal authorities when it comes to administrative/fiscal misconduct.
For all practical purposes they act like “for-profit” institutions.
When badness occurs, attorney generals and DA’s bury their heads in the sand. Trying to fight one of these institutions (as I have) is virutally impossible because they enjoy all the perks and benefits and safety-nets of charitable institutions . . . yet there is NO accountability. It’s a legal black-hole of the jurisdictional dodge.
In North Carolina alone, Medicaid was bilked of (at least) a half-billion dollars in a “disproportionate share” hospital billing scam over several years. The case, investigated by the Feds, was “settled” with the state for pennies on the dollar and NO ONE went to jail. The cases got the quick brush-off in the press. It’s maddening.
Two weeks ago, I finally was granted a meeting with the N.C. Medical Board . . . to discuss my whistle-blower case . . . a case that has been minimized and blown-off since 1998. I made it clear (it’s no secret) that I am at the point where I am ready to start suing the regulatory bodies (i.e. the Medical Board, JCAHO, NC & USDHHS) that dived under their desks and let my case against a non-profit fall through every crack. I don’t want to do it. I am convinced the civil justice system in North Carolina is fundamentally corrupt. But I have had enough.
What I’d love to see is a national media outlet pick up the story (the local outlets have done their best to bury it) and run. Because it’s quite a story.
It’s far past the time “non-profits” were put under the microscope. When you have virtually NO regulation or oversight, ANY regulation and oversight is welcome. The public/taxpayer needs to take off the blinders – and stop assuming that all “non-profits” are all and only about the public good.
There’s a lot to reform. Taking off the rose-colored glasses would be a good start.
In spite of the recent change in adminsitration, there’s still no free lunch. No difference between for- or non-profit, they still have to pay all their bills somehow.
Chuck Brooks
FutureWare SCG
It is amazing how hospitals use the term ” non profit ” just for name sake while their CEO are paid millions. It is a shame that “true” non profit like the ones that overwhelmingly treat medicaid, low income areas suffer the brunt. There are hundreds of cases where the patients are diverted to the real non profits hospitals.
1) In Michigan, where I live, the hospitals value their charity care at their “rack-rate” prices, not at Medicare or Medicaid prices. This provides an incentive to keep increasing their retail prices.
2) I have always thought that hospitals should be banned from giving “first dollar” elite health insurance to their executives and board members. Let them give out high-deductible insurance, so these guys might get a feel for the effect of their pricing.
As you say, there are always unintended consequences.
The non-profit status, HPASS, and facility fees allowed to these institutions is a farce. They operate as if for profit and reap the rewards of what one would think would be true charitable organizations. The only charity they extend is the forced free labor of the hostage non-owned medical staff in requiring them (us) to avail our services for free so they can look on paper to be charitable. Meanwhile, they buy up all of the private practices that they have assisted in driving out of business on the cheap and pay these guys with their “premium reinbursements” and corner the regional healthcare market. Antitrust anyone?
As a physician in a community with a non-profit hospital, I can tell you the non-profit hospital is as concerned with their profit as any non-profit hospital. The only difference between a non-profit hospital and a for-profit hospital is that the former does not pay property tax nor income tax.
Take a look at the income and asset reporting of various non-profit hospitals by reviewing their IRS form 990 at http://www.guidestar.org. For example, one non-profit in Houston has over $1 billion in securities.
Guidestar is a wonderful tool – alas, not many people know about it – and most “non-profits” don’t want you to know (unless you’re using it to dole out grants).
It’s how I figured out I was swindled – not that anyone in any AG’s office anywhere cares.
As for the IRS and their “crack-downs” on bad behavior, they only care if a “non-profit” lies to them. NOT if it lies to a member (or members) of the public.
Your tax dollars shore this up.
Dr. Johnson & Dr. Hekier are correct. And I applaud Dr. Johnson for her efforts in keeping her local hospital accountable.
One of the non-profit hospitals in my county of 65,000 in rural TN has $120M in cash – about $2,000 per resident of the county. About $50M are from tax exempt loans even though it currently has no building project to finance with public funds. So they are reinvesting it at higher rates – playing arbitrage with tax payer money. I have brought this to the attention of Senator Grassley but he doesn’t seem to be interested. I have gone to the local newspaper – but they are not interested in investigating it because the hospital is one of its largest advertisers. Using tax dollars for self-promotion – there something that just doesn’t sound right about that. I too obtained their tax form on Guidestar.
To say you are working for a non profit implies that you are doing charitable work, that you are sacrificing for the benefit of others. Everyone gets tearly eyed and gushy when talking about it. “Such noble people” people are led to believe. The truth is they are bilking the system and not paying their fair share of taxes – income, property, and sales tax. They are also distorting labor and property markets in my town at the expense of tax paying medical profiders like me. When someone says “non-profit” today, I just think “non-taxpaying.”
Thanks, Dr. Johnson, for the work that you have done. That has been quite a service. You efforts should be a front page story of a national newspaper like the Wall Street Journal.
“To say you are working for a non profit implies that you are doing charitable work, that you are sacrificing for the benefit of others. Everyone gets tearly eyed and gushy when talking about it. “Such noble people” people are led to believe. The truth is they are bilking the system and not paying their fair share of taxes – income, property, and sales tax. They are also distorting labor and property markets in my town at the expense of tax paying medical profiders like me.”
AMEN!!!, Dr. Berry. This is exactly the problem I’ve had in trying to get anyone ANYWHERE to MOVE against my hometown hospital – a “non-profit” hosptial that, despite its stated “mission”, has literally driven good doctors out of town so that a few over-paid/over-rated mill-town fat cats can completely control the show. And I’ve had the same experience with local journalists. You can’t mess with the advertising budget or the economic “best interests” of one of the town’s largest employers.
Right and wrong do not mean squat. And you’re not supposed to be angry about that. You’re supposed to skip merrily forward and be a team player and move on along.
And YES, my story should have been on 60 Minutes or in the WSJ long ago (I’ve only been in the blogosphere for four years). Alas, the story of a doctor in public service who was professionally BRUTALIZED for doing her job the way it was supposed to be done (i.e. not wanting to get rich – not sucking up to the whims of local VIP’s – not looking the other way when other doctors were putting patients in harm’s way) . . . a doctor who was then totally ABANDONED by ALL of the governmental agencies & regulatory bodies that are supposed to protect patients & doctors . . . does not fit in with the “universal” healthcare (i.e. government can save us) agenda of the powers-that-be.
But THANK YOU for the encouragement.
Comments on this entry are closed.