Perhaps many small, poorly run hospitals have consolidated into a handful of large, poorly run hospitals. Still, that's no excuse to let Kaiser Permanente generate billions tax free.
As a nonprofit, they cannot distribute those profits to shareholders. That's the whole point.
They're obligated to reinvest those profits back into the business, such as by developing new facilities, upgrading older facilities, and so on.
Ironically, if you forcefully revoked the nonprofit status you'd actually open the door for those profits to go to shareholders instead.
But can I buy a non-profit hospital and force them to start buying syringes from my for-profit syringe company at a 1000% markup?
The owners of the kindergarten hire the daily manager. They hire out the building itself to the kindergarten, as well as HR, accounting services etc. The prices are not 1000% market rate but certainly not competitive. By controlling the daily manager they make sure the kindergarten doesn't try to find better deals.
Thus the kindergartens make no profit, yet the owners can extract a decent profit regardless.
Pretty sure this idea was imported, and not something unique here.
You do not buy a syringe for a 1000x markup. You stand up a group purchasing organization (GPO) as a subsidiary and spin off your entire procurement department to it. You have your negotiating team accept nominal trade discounts off catalog prices, and instead prioritize lump-sum off invoice rebates at various spending thresholds. So while you previously got a $50 syringe discounted to $25 from a supplier, now your group purchasing subsidiary is paying nominally less than ~$50 per syringe but recieving a lump sum rebate against accounts payable from a supplier equivalent to $25 per syringe based on your primary client's expected spending volume (which is pretty predictable considering your former procurement department turned subsidiary has been working with this supplier for ages).
The group purchasing subsidiary then adds a nominal markup of their supply catalog, say 20% or so. So that $50 syringe is sold to the hospital for $60. A 20% markup is considered fair and reasonable so your auditors give it their blessing. Suddenly the hosital is paying $35 more per syringe but the supplier is still getting the same $25 they always have. You also sign up another local hospital to join the GPO and negotiate even higher rebate thresholds. Both hospitals auditors and lawyers point to the industry wide practice of GPOs and their perceived benefits, making plausible enough defenses against both criminal and civil complaints. The executive team of the GPO that came over from their parent orgs and orchestrated this whole thing get generous (but fair market rate) employment contracts and benefits that just happen to absorb the maojrity of that $35 per syringe profit so very little ends up bubbling back up to the non-profit parent entities.
Do the same thing with selling your real estate to a real estate holding company, which leases it back to you at market rates (that just keep going up and up). Do the same with your nurses – spin up a nursing staffing company and contract all your nurse staffing through it. Same with physicians – spin off any directly employed physicians into a physician staffing company and conmtract with them for services.
As long as you follow the appropriate corporate formalities, you suddenly have a ton of knobs you can turn to engineer any particular operating margin you want your healthcare system to be perceived as having. This isn't limited to hospital systems, but with the prevalent level of inefficient middlemen entities that already exist in the US healthcare system and contribute to runaway costs, it's pretty damn easy to throw a few of your own into the mix in a manner that passes legal scrutinty around self-dealing. There are also plenty of liability-related reasons to justify such setups as well, so it's not purely a shift around profits from your tax-exempt non-profit entity.
And insurers don't actually care much at all about any of this. As they're required to pay out 80% of premiums as claims and only allowed 20% for administrative expenses and profits, the easiest way to increase profits is for claims to increase (and subsequently allowing the absolute value of that 20% piece to grow). If hospital charges go up across the board because of these sorts of shenanigans, that's as much a boon to the insurers paying out as it is to whatever lucky winners are siphoning off the profits from those related entity subsidiaries.
[1] https://www.aeaweb.org/research/regulating-health-insurers-a...
i mean look at sam altman, using openai funds for what was originally a NONPROFIT, to fund areas with conflicts of interests.
At least when it's for profit it's out in the open.
Ironically when they get bought out by PE they lose their tax exempt status, so that's kinda solving the problem.
MSOs are organized as LLCs, not 501c3 organizations.
The kinds of hospital networks that are run as 501c3s would be something like a CommonSpirit Health, Advent Health, UPMC, Mass Gen Brigham, etc.
> Perhaps many small, poorly run hospitals have consolidated into a handful of large, poorly run hospitals
Kinda. That's how CommonSpirit Health came to be, except backend management is basically centralized.
Focusing on profit is fundamentally sound unless you’re a monopoly, which tend to be when Gov sticks its beak into things it shouldn’t.
The "non-profit" organizations are given tax-exempt status because they are centered around providing a public or social benefit, they explicitly should not be focused on providing a profit to their owners.
In my opinion the majority of people can't afford to choose their hospital. Often it's the one that is within their means to travel and provides the service they require, regardless of the quality of their services. And, of course, after a serious accident you end up wherever the ambulance brings you.
We’re talking about hospitals. Many areas are served by one local hospital. And where there are several, it’s typically the ambulance who decides where you go. It’s also pretty difficult to compare one hospital with another.
IMO hospitals resemble utilities where market forces aren’t enough to guarantee good service.
Don't necessarily disagree with most of your sentiment, however the vast majority of hospital patients do not arrive in an ambulance, or even through the ER.
A lot of hospital services are elective or planned (surgeries, pregnancies, etc) and for those I've found it very helpful to 'shop' for the best options.
Also, the one time I was in an ambulance, they asked which hospital I wanted my daughter transported to.
All that said, it isn't always possible or feasible to choose - but it's not because of an ambulance.
Ok, if "many areas have one hospital"... I don't think that's true at all. Most areas have multiple hospitals. Most people live in metropolitan or suburban areas.
Increasing taxes and removing alternatives is never a good deal.
"market forces aren't enough" government forces aren't enough either.
The VA is the penultimate example and I wouldn't wish that upon my worst enemy. That's where our veterans go to commit suicide in the parking lots waiting on help.
22 Veterans.
The people I know who use the VA are quite OK with it. It's not perfect but none of them would want to put up with the insanity the rest of us has to.
"it's not perfect" It's garbage and a prime example of government programs. Works for a few and fucks over the rest.
The ACA helps a few... and is built on lies - keep your plan? keep your doctor? save $2500 a year? Lies, lies, lies... a few million get help. The other 100m pay more, higher deductibles, lose their plans, lose their doctors.
But who cares about the 100m if the 1m get helped, eh?
the biggest problem is the wasted money, the lies and the people dying in the parking lots.
But who gives a f' about them eh?
The problem is the suggestion that government solutions will solve government created problems.
I have no problem admitting things can be fixed... but stuff like the unAffordable Care Act which is built on lies (Like your plan? Like your doctor? save $2500/year) is not going to solve the issues - nor is single payer, government ran solutions.
You'll never solve government created problems with government ran beauracracy.
The problem is that the conversation only focuses on the good parts of those systems and ignores the issues.
You can't have a real conversation and claim "have it better" when that may be true in parts but not in whole.
I don't claim the US system is better... or the best. But claiming that government ran or government overregulation leads to better is a lie. The VA is proof of that. the lies around the unACA is proof of that. The ever increasing prices and decreasing results due to government influence is proof of that.
Destroying what we have with something like the ACA isn't proof that government ran will be better... it's simply proof that people are willing to destroy what was working and claim that the destroyers will do a better job if only they have more money and more power.
That's like CA solving homelessness. "more money, more power and we'll solve homelessness" and there's never been more homelessness or less affordability in CA.
Paramedic here. It's typically, effectively, your insurance that dictates how we decide where you go.
If you're an acute, time-sensitive patient, then from a multitude of angles, "closest appropriate facility" makes sense.
Perhaps you dislike a hospital, or it's inconvenient, and you're not as acute or timely a patient, and your view is "I want to go to X hospital, and since I'm paying, why shouldn't I get to choose?"
As a paramedic, personally, I don't care.
However.
Your insurance does. And their perspective (sometimes rightly, and quite regularly wrongly) is that if you are well enough to bypass a hospital or multiple hospitals en route to a "chosen" facility, then did you need the ambulance? And if you didn't need it, why are "they" paying for it? And they can, and absolutely will, kick bills back to the ambulance company with a "please justify why an EMS transport was required versus advising POV (privately owned vehicle) transport or physician followup".
What they want to see happen, and what generally is actually the better option, as a provider is "we will go to the closest facility where they will assess and stabilize you as needed. if you then wish to be -transferred- to your facility of choice, they will organize that" (and, since the insurance criteria and questions are met, and a physician ordered the EMS transport, you should be covered). Though it is certainly less "convenient" for you.
Even beyond that, the area I'm in we have two hospitals. One is a Level 2 Trauma Center, one is a Level 3, but they're mostly comparable except for, well, acute trauma. We as providers will have a solid perspective of patient load in the ED of those hospitals, so I might ASK, not TELL you, hey, we might want to go to Hospital B, not A. And occasionally, though diversion is a convenience, not a concept under EMTALA (we can still absolutely show up at the ED with a patient even if they're "on divert"), some of the facilities here will round-robin to balance patient loads.
(Also, don't start me on Certificates of Need, where new hospitals essentially have to get the permission of existing hospitals in the area before they can open - essentially, "will you be okay if we take patients away from you"...)
It's the idea that a comment that supports the basic foundation of the organization who run this board gets so severely downvoted.
I'm justing calling out how ironic it is.
The language you've chosen is baldly ideological and leaaves no room for good faith discussion.
If a sandwich shop produces bad sandwiches then eventually people stop buying them and shop around. This doesn't work with hospitals. In the worst case, dead people can't shop around.
This isn't a discretionary purchase, let's stop pretending one can go shopping for care.