By now we're all used to the idea that the “free market” is no longer free, except perhaps at the small business level, and that real competition is dead - replaced by companies that are “to big to fail.” Anyone who has tried to find a “competitive” cable or internet provider knows this. Besides the lack of competition, we have, as a nation, been bailing out companies whose leadership, or lack thereof, had brought them to the brink of collapse for some time. Chrysler Motors comes to mind. It was bailed out in 1979, and used massive lay-offs and wage reductions to become profitable. The next time it was bailed out, in 2009, the taxpayers lost 1.3 billion directly, and much more indirectly through lost revenues. Nevertheless, corporate welfare programs have continued through the years. Who can forget the executives of failing savings and loan companies walking off with hundreds of thousands of dollars in “executive bonuses?”
Why do I bring the free market up now? Well, Obamacare, which we hope will provide near-universal healthcare, is likely to be highjacked by the same “free market” geniuses that brought us the savings and loan crises. Undoubtedly these geniuses will point to for-profit healthcare as the way to go - to foster “competition” in healthcare. Supposedly this "competition" will save money - but will it? For-profit healthcare has had a bad name for a long time, with “managed care” being used as a curse by the many people afflicted with it.
People in the healthcare industry have said for years that for-profit healthcare has very high administrative costs due to its ridiculously high CEO salaries; That it “cherry-picks” patients; That for-profits avoid opening full service hospitals and open speciality hospitals that only perform high profit procedures, and that they abandon areas or contracts that don’t meet their profit goals. They have also pointed out that for-profits lower staff salaries while increasing CEO salaries, and that for-profits undermine medical education.
Of course, the private healthcare sector has spent a lot of money trying to prove that the care that for-profit hospitals provide is as good as non-profit hospitals’ care. If you read some of the articles, you might agree with them. In fact, a number of studies say there is practically no difference in the quality of care provided between for-profit and non-profit hospitals, just differences in what they call the "focus" of the care.
There are two problems with these studies. First, for-profit hospitals generally refuse to provide data to researchers, especially when it comes to salaries, and fail to file reports with the American Hospital Association much more often than non-profits - up to four times more often. That’s kind of like you or me saying to the IRS, “Well, last year was a good year for me, so I figured I wouldn’t file that year, but this year I lost money. Can we just focus on this year and forget last year?” But instead of the IRS auditing the hell out of you, the AHA just shrugs its shoulders.
Secondly, when you look at ALL the studies, as Herrera, Rada, Kuhn-Barrientos, and Barrios (2014) did, you’d find that of almost 6000 studies reviewed, only 15 studies did not have major limitations, and when the researchers reviewed the small group that had good data, they found big differences between for-profit and non-profit hospitals. For-profit hospitals received higher payments, but even so, more of their patients died.
Now I’ve written about the problem of for-profit healthcare (it even sounds like an oxymoron) in general terms, but I know of a specific case that's very interesting and illustrates the problems with for-profit hospitals. If this column is well received, I may share it with you. Let me know.
