In the midst of a pandemic during which health care workers proved themselves to be very bit the heroes we like to think of them as being, it’s sobering to be reminded that the system they work in is filled with perverse incentives that work against patients’ best interests. Four pieces of excellent journalism – two from The New York Times, and two from Kaiser Health News -- this week brought that front and center.
If you haven’t read them yet, I urge you to do so,
but, while you might enjoy the writing, don’t expect to enjoy their content.
Credit: Kulture Hub
Let’s start with two articles in The New York Times
“Profits over Patients” series by Jessica Silver-Greenberg and Katie Thomas:
They
Were Entitled to Free Care. Hospitals Hounded Them to Pay and How
a Hospital Chain Used a Poor Neighborhood to Turn Huge Profits. Both focus on “non-profit” hospitals – Providence, serving the northwest/west/southwest,
and Bon Secours Mercy Health, serving Midwest/east/southeast (and Ireland).
Providence used a program called Rev-Up, designed by
McKinsey, to solicit payments from patients who should have been entitled to
free care due to their incomes. “Ask
every patient, every time,” employees were instructed. And, “If patients did not pay, Providence sent debt collectors to pursue them.” The state of Washington thinks this happened
to at least 55,000 patients.
Mind you, Providence
gets huge tax breaks in part to support such free care, and claims that it
provides some $1.9b in these kinds of “community benefits.” The article notes: “Providence is sitting on $10 billion that it invests, Wall
Street-style, alongside top private equity firms. It even runs its own venture
capital fund.” The article also
points out that Providence’s charity care only accounts for 1% of revenue, versus
an average of 2% for non-profits nationwide.
Providence’s CFO told
the reporters that the findings “are very concerning and have our attention.” OK, then.
I’m not sure which would be worse: that the CFO was complicit in the
scheme, or was truly unaware it was going on.
The second article focused on a Bon Secours Mercy Health hospital in Richmond (VA), Richmond Community. It is an inner city hospital, serving a primarily Black population and now consisting mostly of an emergency room, yet it managed to the highest profit margins of any hospital in Virginia, some 44%, which yields over $100 million in profits.
It did so by using a federal program (340B)
that allows certain hospitals to buy prescription drugs at greatly reduced
prices, yet charge the full amount to insurers.
The hospitals are supposed to reinvest those profits into improving care
and facilities, yet Bon Secours used them to invest in more profitable neighborhoods.
“Bon Secours was
basically laundering money through this poor hospital to its wealthy outposts,”
one ER physician told the reporters.
Bon Secours claims it
has invested millions in the hospital and the community, but skeptics think it
is more interested in real estate deals and the outlying hospitals. After a merger with Mercy Health in 2018,
Richmond’s former mayor said: “There was a major shift from being
mission-oriented to being unashamedly, unabashedly profit-oriented.”
Both systems are not only non-profits, they’re also
faith-based/mission organizations. We should expect better.
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Lauren Weber of Kaiser Health
News focused on the dual pain of losing a baby and being sent to
collections for the care in Shattered
Dreams and Bills in the Millions: Losing a Baby in America.
In one case, a couple had a baby with a congenital heart
defect. She survived some eight months, with
the billing meter running the whole time.
The bills ultimately reached $2.5 million, a figure that proved to be
incorrect, yet they still had a $4,000 deductible and several charges not covered
by insurance. Then they got the $26.50
collection notice.
I mean, really?
Ms. Weber highlights two other couples whose surprise bills
came just as they were undergoing that unique pain of losing a child. Dealing with them cost time and emotional energy
the families couldn’t spare. "I just wanted to be with Bennett;
that's all I wanted to do," one mother told her. "And I just spent
hours on these phone calls."
These bills “compounded their suffering
during a time when they were just trying to process their loss.”
Shame on the organizations responsible for that.
KHN’s analysis found: “Sixteen of the 25
private equity firms identified by industry tracker PitchBook as the biggest
health care investors have bought stakes in optometry and ophthalmology
practices.”
Ms. Weber writes that the private equity groups “buy up these practices — or unify them under franchise-like agreements — with the hopes of raising profit margins by cutting administrative costs or changing business strategies,” but the real upside comes from upselling patients:
For example, doctors can use lasers instead of cutting eye lenses manually, offer multifocal eye lenses that can eliminate the need for glasses, or recommend the astigmatism fix that Green said she was sold. Often, patients pay out-of-pocket for those extras — a health care payday unconstrained by insurance reimbursement negotiations. And such services can take place in outpatient and stand-alone surgery centers, both of which can be more profitable than in a hospital setting.
One Johns Hopkins analysis found that acquired
practices got an extra 20% in their insurance reimbursements, as well as
increased patient volume. KHN’s own
analysis found that private equity firms like to invest in doctors who are
frequent prescribers of expensive macular degeneration drugs. “The
private equity model is a model that focuses on profitability, and we know they
are not selecting practices randomly,” one expert told Ms. Weber.
This is not about care; this is not about patients. This is about money.
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I’m not naïve. I
know there are profits in health care, and, generally, I’m OK with that. A CEO of a non-profit I once worked for
preached: “No margin, no mission.” But
there’s a line, or a slippery slope, when the margin becomes the mission. When you’re sending struggling families to
collections, when you’re overprescribing expensive drugs or services, when you’re
laundering money from poor communities to wealthier ones – come on, you know
that’s wrong.
To the health care executives who develop, oversee, or
benefit from them: we’re watching.