Sunday, March 17, 2013

North Carolina's Big Hospitals Predatory Practices

Liberal politicians never fail to scream about the “record profits” of oil companies, but you’ll never hear them complain about big hospitals.  The profit margin for the integrated oil and gas industry is 7.9%.  Nationally in 2010, big hospital recorded a 9.3% profit margin.  In North Carolina, Duke Hospital pulled in a 20.1% profit margin.  Now, that’s an eye opener.  Here are a few reasons why:    
In North Carolina’s cities, these hospitals are piling up profits, along with billions of dollars in reserves. An investigation by The News & Observer and The Charlotte Observer found that:

• UNC Hospitals and Duke University Health System recently booked record profits. Duke’s total profit, which includes investment income, rose to a half-billion dollars in 2011, a margin of 20.1 percent.

• They’ve made their money largely from employer-sponsored health insurance, often inflating prices on drugs and procedures – sometimes to three, four or 10 times over costs. North Carolina hospital costs are more than 10 percent higher than the national average for Aetna, said Jarvis Leigh, a network vice president.

• They’ve hiked their fees each year, leaving many patients with crippling debt. Some hospitals have sued thousands of patients, while others have turned to collection agencies to pursue debtors.

• They’ve plowed their profits into expensive buildings and machines and have rewarded executives with generous salaries. Twenty-five executives of public and nonprofit hospitals in North Carolina had total compensation of more than $1 million in 2010 or 2011, the most recent data available.

• They’ve solidified their market power by stashing billions of dollars for future purchases. Duke, for example, has reserves of $1.5 billion. In Charlotte, Carolinas HealthCare System has banked more than $2 billion

Another factor in soaring health care cost is a third-party payer system.  Hospitals make up the losses for Medicaid and Medicare patients by overinflating their prices onto the insured.  Also, patients are removed from the decision making process.  That ultimately leads to unnecessary testing and questionable billing practices.
What is amazing is that these same hospitals are demanding that North Carolina legislators approve the expansion of Medicaid.  Why is that?  Could it be to drive independent practitioners out of business and into their all-encompassing rubric?

Many independent physicians can’t keep their doors open because of the low reimbursement rates of Medicaid and Medicare, while at the same time compete with the predatory practices of big hospitals.  Independents are retiring, or joining the behemoths.
Consolidation almost always leads to higher prices.  And Obamacare certainly will contribute to the cost.  Here is an excerpt from the News and Observer stating just that:

With the 2010 passage of the Affordable Care Act, the Obama administration aims to control health care costs.
Some experts, however, fear the law – under review at the U.S. Supreme Court – could wind up doing the opposite. The law calls for the creation of networks of hospitals, doctors and other medical providers. But that sort of consolidation, studies have shown, almost always leads to higher prices.

With mergers and acquisitions, some hospital systems have become so large and dominant that they can easily raise their prices.
Increasingly, the Triangle is dominated by three expanding hospital systems: Duke, UNC and WakeMed.

And isn’t that what Obamacare is about? Consolidating services and resources into one giant monstrosity?  And as we’ve seen with the politicians and bureaucrats in Washington D.C. cost is of no concern to the totalitarians, particularly when they want to control it.

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