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Comment by ganlaw | Hacker News Reader

Hospitals shouldn't be a profitable business. The primary goal of a hospital should be serving patients sickness. (Easier said than done)

My partner is a physician at a hospital in NYC, and something that they are struggling with now is lack of social services for patients to get them out of hospital beds and into homes/rehabs.

As a immigrant in this country, I am constantly flabbergasted by the state of healthcare here and people's willingness to accept hospitals as profit seeking businesses the same as a fortune 500.

Obviously if the law allows these hospitals to seek profits, they will. So the question is, how do we change the law? And why don't people want to change it?

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Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away.

The insurance system and perverse incentives embedded in it is the primary reason healthcare is expensive here. Also many countries have price controls on drugs, and US does not (thus subsidizing RoW in regards to new drug research).

https://www.chiefhealthcareexecutive.com/view/hospitals-losi...

"Also many countries have price controls on drugs, and US does not (thus subsidizing RoW in regards to new drug research)"

I think this line is BS propaganda by the pharmaceutical industry. I am 100% sure the US would be way better off if they controlled prices and then subsidized research directly instead of paying outrageous prices.

As far as hospitals losing money, this doesn't mean that they are using their money efficiently. My ex used to do auditing of hospitals and a lot of them showed a circle of friends consisting of local construction company, architects, business consultants, doctors and others. They all lived well on charging a lot of money to the hospitals and the hospital execs didn't check because they were all buddies.

> Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away.

But... if they're already losing money because they're inefficient, with a 'profit motive' in place... it's obviously not enough of a motive to be efficient. They may be losing money not because of inefficiency anyway, but assuming so... existence of 'profit motive' coupled with inefficiency should be evidence enough that they're not linked.

> Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away

If I had the choice between system A with excellent community health outcomes, but didn't turn a profit, was heavily subsidized, and ran with operational bloat, versus system B which ran lean/efficiently but produced poor health outcomes I would choose A every single time and I imagine most people would

Currently in the US we have neither. We have a bloated/inefficient system that also produces poor community health outcomes. But at least a few private equity firms might turn a profit, so at least there's that??

This comes up in every thread about healthcare and it's just plain wrong/backwards.

The reason they appear to be losing money or close to losing money is by design, because of the incentive to be inefficient. It's a way to balloon the "costs" in their accounting and demonstrate to the outside observers that they are "oh so poor" and need help, whereas in reality, they charge exorbitant amounts for procedures and then mark it off as "losses" when consumers can't pay.

If you look at Hospital REITs, the majority of the systems have low rent coverage on a cash flow basis. Look at the distribution yields/low multiples applied to hospital real estate... many are priced with high tenant default/bankruptcy risk.

e.g. MPW

Hospitals are not the same as Medical Office, which tend to be more profitable. Where are the facts to corroborate your statement?

The uk National Health Service is free at the point of use, and is a completely government run, non-profit service. That model doesn’t seem to be working either:

https://www.cnn.com/2023/01/23/uk/uk-nhs-crisis-falling-apar...

Same as Canadian. It took me 7 months to get an endocrinologist appointment. Luckily I was in traveling in Mexico and saw one there. If I had waited for my Canadian appointment, i would have lost all my hair and over 30kgs by that time. (It was a harmone related problem).

> That model doesn’t seem to be working either

The model works just fine. The reason the NHS isn't working is because the Conservative government has intentionally underfunded it (UK per capita spending on healthcare is significantly lower than other European countries).

That, plus the CNN article shared above can’t simply be reduced to failure of “the model”:

> Explanations for the current crisis “have to start with a consideration of Covid-19,” Ben Zaranko, an economist at the Institute for Fiscal Studies (IFS) whose work focuses on Britain’s health care system, told CNN. “There’s the simple fact that there are beds in hospitals occupied by Covid patients, which means those beds can’t be used for other things.”

I think only allowing nonprofit hospitals would be worse than the current state of affairs. You'd still be asking private organizations to be responsible for ensuring we have adequate medical treatment available, but you'd very literally be relying on the charity of strangers to ensure that. For-profit medicine at least provides excellent incentives for corporations to spend the enormous sums of money needed to set up and run hospitals.

If you're against hospitals being for-profit businesses (which I think is a perfectly reasonable stance), it seems to me the real alternative would be government-run hospitals. Then you'd have a centralized, well-resourced organization that is generally incentivized to keep people healthy running things, rather than just hoping that enough non-profits get involved to serve the medical needs of the country.

It would take a rethinking of how the government would run the medical systems though. For example, the Veterans Administration hospital system is now a mix of Govt. and Referrals to for profit because the Govt. run hospitals have failed to meet standards / needs consistently. The health care has always been deemed pretty subpar / inadequate as well.

I'm not opposed to a government system, but it needs to be a redesign and re-haul of everything we've done so far and the reality is that it's just not likely to happen.

There are some exceptions to quality at the VA, notably when the VA is co-located with a school such as Stanford in Palo Alto. There they often have great medical providers and support.

Almost every hospital organization is actually a non-profit.

However non-profit does not mean non-revenue.

Hospitals have real costs, and it is entirely possible the emergency department was a money sink. No one can be turned away, so it is used as the healthcare of last resort for those without other access, who, almost by definition, cannot pay.

Profit is a strong incentive to optimize. non-profit organizations are under different incentives. They both have pitfalls, they both have advantages.

Profit is a strong incentive when there's active competition. When there's not competition, for-profit business turn to extracting rents on captive customers.

Health care larger is not a competitive market. Lots of customers only have limited options (i.e. rural hospitals) and the urgency of some purchases don't support competition (i.e. ER visits)

I agree its not a competitive market. Rural areas suffer in all areas of limited markets, medical isn't special. Government involvement (including, but not limited to limiting licensing). insurance clouds the market as well (both how we procure insurance and government limitations of insurance).

> Profit is a strong incentive to optimize.

Optimize what? Certainly not costs, since for-profit hospitals have every incentive to push for unneeded expensive operations.

Maybe you’re mistaking healthcare for a market where meaningful competition and information symmetry exists?

> My partner is a physician at a hospital in NYC, and something that they are struggling with now is lack of social services for patients to get them out of hospital beds and into homes/rehabs.

The reason for this is opiates. Any time any place in the US sets up free or low cost shelter, the dope addicts move in.

Other industrialized nations don't seem to have as many addicts as the US, or maybe they still have real heroine instead of fentanyl.

Non profit, publicly owned hospitals can be just as bad- https://www.vox.com/policy-and-politics/2019/1/7/18137967/er...

Aren’t most hospitals in the states non-profit? But all those doctors and administrators want money, so it hardly matters.

Hospitals shouldn't be a profitable business.

Then elide "profitable" since that is the goal of every business.

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