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How Hospitals’ Refusal To Prepare For A Pandemic Screwed America


When the eventual COVID-19 post-mortem is conducted, the big culprit in the economic mayhem unleashed upon Americans is going to be the health-care industry, specifically hospitals.

When my wife and I attended a socially distanced evening happy hour at a neighbor’s home, the conversation turned quickly to COVID-19. I criticized our county’s heavy-handed response to the epidemic, and the hospital executive in the group solemnly intoned, “The shutdown saved the health-care industry … we could not care for large numbers of people all at once.” This person also went on to define a COVID-19 case as “any person who tests positive.”

A person who tests positive for COVID-19 but is asymptomatic is no more a “case” than any one of the 80 million American adults harboring latent (frequently harmless) human papillomavirus constitutes a case of a sexually transmitted disease. But this executive knew his script by heart, and spoke his lines earnestly. On the walk home, my wife posited that hospitals owed their communities a financial debt because of how much everyone sacrificed to protect them from their lack of readiness for a pandemic that their own leaders have talked about for more than 20 years.

Indeed, the COVID-19 economic cataclysm has disproportionately affected hourly workers, small business owners, and low-skilled workers who cannot plug in, turn on, and Zoom in from home. If the Fed is right and the downturn erased 6.5 percent from the gross domestic product, then Americans — particularly people who cannot afford it — have sacrificed their jobs, their businesses, and even their life savings for a trillion-dollar industry that wastes 30 cents of every dollar it receives.

What is owed to these people? Are they owed free care for the depression and anxiety they suffer? Will they obtain free counseling to treat the substance abuse and domestic violence resulting from the relentless emotional and financial strain? What about compensation for the homes and businesses destroyed by rioting all around the country, no doubt influenced by the loss of 20 million jobs so we could save the hospitals?

Thanks to President Obama, the hospital industry has never been richer. The profit margin at American acute care hospitals is 8 percent, according to a detailed report by the Center for American Progress. Hospital profits have increased by roughly 50 percent during the Obamacare years. The 8 percent margin exceeds profits for retail pharmacies, pharmacy benefit managers, and widely vilified health plans.

The margin pales compared to profits for device and drug makers, but their products have moved large amounts of care out of hospitals and into less expensive outpatient settings over the past three decades. The ripple effect was that hospitals gave lip service to things like pandemic planning, but robustly invested in cash cows like palatial birthing suites, sports medicine, joint replacement centers, and worthless disease management programs, to make up for heart and cancer care now done on a short-stay or ambulatory basis.

Hospitals already bleed American taxpayers for quite a lot. Half of U.S. hospitals are not-for-profit, at least in name (about equal proportions are government-owned or for-profit). While non-profits supposedly care for uninsured patients in exchange for their tax exemption, no one can say conclusively whether communities benefit.

Hospitals also guzzle from the public trough in who pays for care. Medicare and Medicaid pay for lmost 60 percent of hospital care. Another 30 to 35 percent of hospital income is from private health plans, which are tax-advantaged because employees who get health insurance through their employers pay premiums with pre-tax dollars. Additionally, 84 percent of people buying insurance on the exchanges are taxpayer-subsidized. Only a pittance of hospital revenues are self-pay patients or worker’s comp.

Despite all these public benefits, cost-shifting and outlandish charges are commonplace. Hospitals protest that Medicare and Medicaid pay them too little so they must artificially jack up prices and then negotiate discounts with insurers. In reality, many hospitals have no idea of the true costs of care; they just know what they can get people to pay. It’s a scam that would make the most deceptive used car salesman blush.

Still, it is not enough, and hospitals lobby for more at every turn. The industry spends tens of millions on lobbying, and its executives give more to Democrats than to Republicans. Hospitals were amongst the first groups in line when COVID-19 panic set in, getting $175 billion in emergency funding from the CARES Act bailout. Despite this unprecedented largesse, hospitals are already claiming that they are running out of personal protective equipment for staff. With another relief bill in the offing, hospitals will assuredly jostle to the front of the line.

Hospitals in every community who begged, nay, demanded that their local economies self-immolate on pain of state enforcement owe their communities both data and money. They should commit 6.5 percent of their revenues to their local areas for as long as it takes to return to something that resembles business as usual. Recycling their extravagant public benefits is the least hospitals can do. But they won’t.

The whole game is, of course, a political con. The hospital industry — indeed all of health care — is desperate to carry Joe Biden across the finish line to ensure a veritable IV drip of taxpayer money remains wide open. They will obscure or obfuscate any data to do it.

Take, for example, recent reports about surging hospital admissions in Texas. If one examines the details, the data shows hospital critical care capacity utilization rose to 15 percent from 10 percent, but this is shouted as “hospitalizations surge 50 percent!”

There is no reason other than politics for the failure to disclose the age, race, sex, and insurer for all patients hospitalized for COVID-19, as well as their length of stay and discharge status. Truly, it’s time to stop repeating the lie of hospital neediness and poverty, and reject using the cudgel of the state to enforce the mythology.