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HOSPITALS: And while we’re on the subject of making too much money

If you read the Bruce Bodaken interview referenced in my other post today you’ll see that he complains about a certain hospital organization pricing too aggressively and being cut out of part of the CalPERS HMO network that Blue Shield runs. That unnamed organization is of course Sutter Health, which has used it’s local oligopoly power gained by a series of quasi-mergers in the mid-1990s to raise its prices and its profits considerably.

Now I’m not clever enough to really understand who is accountable for what in a big non-profit hospital, and by the time you add into that mix a "system" made up of all types of different management and ownership arrangements, without any clear stockholding ownership, then I’m lost completely. Back in the mid-1990s when it joined Sutter, Cal Pacific medical center was bleeding money. I speculated to my clients back then that I wasn’t sure that other parts of the Sutter system would have bailed it had it gone under. But Sutter took advantage of its bargaining power to push up costs, and the plans took it in the shorts for a few seconds until they realized that they could turn round and stick that cost onto their clients, and still make record profits. (Actually that’s not exactly how this long 2003 article on Sutter’s integration describes Sutter’s strategy, so you might read it for a more balanced view!) So everyone was happy.

Or almost everyone. Now Cal Pacific is making too much money. So much that the City of San Francisco, which I assume is pretty broke given the way it comes after me for egregious property taxes and parking tickets, and is increasing bus & train fares for its poorest residents again, is revoking its non-profit classification and is going after Cal Pacific for property taxes.

Which leads us to the old age question of, what exactly is non-profit about wealthy hospital systems that throw off a ton of margin? Or for that matter similarly profitable health plans? I suspect this question will come back again.  But don’t worry guys, my in-depth analysis of oil companies seems to indicate that you won’t have to pay any tax on all those profits anyway.

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Cannot believe these hypocritesCannot believe these hypocritesShockedAgreeDislike sleaze Recent comment authors
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Cannot believe these hypocrites
Guest
Cannot believe these hypocrites

If the link didn’t fit, Google “Hospital Giving is a Local Matter” from The Naperville Sun for the article where they blame the SEIU.

Cannot believe these hypocrites
Guest
Cannot believe these hypocrites

Look at how the hospitals are trying to blame the unions, like the SEIU, on this whole charity care issue: http://www.suburbanchicagonews.com/sunpub/naper/editorials/6_4_NA07_EDITORIAL_S1.htm From the report: “The latest development is a survey – funded by a union with its own agenda against the hospitals – that looked at 21 hospitals in Cook County and reported they enjoyed $326 million in tax breaks while making only $105 million in charitable contributions.” FACT Non-profit hospitals are under fire not only from unions like the SEIU and trial lawyers like Richard Scruggs, but all of the following are on the case as well. The Senate… Read more »

Shocked
Guest
Shocked

Hospitals are not so innocent themselves, even though they are harassing poor and indigent people over debts owed when many of those people ought to qualify for charity care.
http://www.usdoj.gov/opa/pr/2002/May/02_civ_257.htm
Look at this! Settling Medicare fraud allegations! Terrible. What a disgrace when you consider that hospitals should be about CARING.
These scoundrels take the word “care” OUT of healthcare.

Agree
Guest
Agree

Yes, there is one hospital billing and collections firm in Illinois where you have to go hang out and party in bars or go to parties with the supervisors and managers to get ahead. It was mostly immature 20-something people in charge, and they would invite staff they liked to go hang out and party or go out to eat on non-work time. If you weren’t on the goofy Let’s Go Party list, you didn’t get promotions or raises. Most people left within a year, because it was very unprofessional. That’s who is handling medical records and UB92’s for some… Read more »

Dislike sleaze
Guest
Dislike sleaze

I worked insurance follow-up for one company that hospital clients outsourced to, and the men acted like they expected the women to be the entertainment at the company picnic, or something. They had on dance music and kept push push pushing some of the more attractive and young women to attend (one didn’t want to and was trying to get out of it). They also spent time in Las Vegas where the industry holds many conventions, so I think these guys thought that hey, since they see young women acting all provocative in the casinos out there, then maybe the… Read more »

FYI
Guest
FYI

The hospitals are in the courts. Don’t worry. The mess is getting fixed via the courts. Here’s the huge Illinois case that is currently moving forward. The hospital system keeps trying to blame the SEIU, but if it is only the union, then why is the case moving forward? http://www.cliffordlaw.com/not-for-profit-hospital-class-action-litigation/press-releases/not-for-profit-hospital-class-action-litigation-press-release Also, in Washington, Charles Grassley is supposedly working on legislation to curb some of the more serious abuses, so that is good to know. This all came to a head in Washington, by the way… http://waysandmeans.house.gov/hearings.asp?formmode=view&id=4018 http://waysandmeans.house.gov/hearings.asp?formmode=view&id=2719 http://biz.yahoo.com/prnews/060518/dcth063.html?.v=41 Illinois is THE hot spot for this whole issue, and it is… Read more »

Information
Guest
Information

http://www.consejohelp.org
http://www.wherethemoneygoes.com
Take a closer look at our so-called non-profit hospitals.
And these overpaid executives also hold frequent conventions in Las Vegas, Nevada. Gee, aren’t there legal prostitutes just outside of Vegas? I’ve always wondered why Vegas was such a popular convention spot for the hospital execs and their trade associations!

Worked in claims
Guest
Worked in claims

The hospitals do use sleazy collections agencies to outsource a ton of the work to, which is why you wonder why they are tax exempt when they send out work to for profit firms that basically handle so much of their work for them when it comes to the financial/billing stuff. Total scam. Not to mention that one firm in Illinois (a collections company) drags in these people whose past work experience consisted of being a bartender, working at McDonald’s, or at the local mall. Some were totally drugged-out types who could barely spell properly, and yet there they were… Read more »

Carl Schurz
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Carl Schurz

Does anybody else picture “rdf” as a used car salesman in a really bad suit?
Sure. just go get a primary care doc. It’s that simple! if only all those 44 million dumb suckers would just go out and get themselves some health insurance, we’d be fine.

rdf
Guest
rdf

gadfly, you just don’t get it! Find a primary physician/clinic to handle your primary care needs and leave the hospital emergency rooms for real emergencies.
As to Sutter E.R. physician billing, look at the conditions of admissions form which you signed (but obviously didn’t read)and were give a copy of. It clearly states that the physicians charges are seperate from the hospitals charges.
As to your fear of collection agencies, I suspect you have been down this road before, once or twice. My advice is to pay your bill.

gadfly
Guest
gadfly

//didn’t get what he paid for in the hospital emergency room// The first time I definitely didn’t. I was sent home with a cursory examination – and this forced me to return the next day and thus get double-billed for the same problem. //collection agencies// The issue is that I applied for and qualified for coverage that was supposed to pay the whole bill. Everyone, from the intake clerk to the financial counselor I turned my forms in to let me think this was the case. I didn’t know that physician’s bill was separate until I started receiving calls from… Read more »

rdf
Guest
rdf

I am new to your blog but thus far find it entertaining. I am amused that gadfly feels like he didn’t get what he paid for in the hospital emergency room and thinks collection agencies are slezzy because he hasn’t paid the doctor. I wonder why hospital emergency department bills are so expensive? As to Sutter, they have managed to do what has eluded 70% of other hospitals in the state, make a buck! Would it be better to raise the sales tax or assess a parcel tax to support an inefficient but necessary hospital system (Alameda County)? It is… Read more »

hsfrey
Guest

>Profitable non-profits aren’t bad unless they’re (passively or actively) exploiting the system.<
Of COURSE they're exploiting the system! Where do you think those profits go? In Kaiser, 50% goes to the pension plan of the for-profit doctors of the Permanente Medical Group.
In the others, it goes to obscene executive salaries and perks.
And, of course, they ultimately sell out or convert to a for-profit status, pulling billions out of the conversion for the execs.
It's an outrageous scam on the taxpayers and the community.
Harvey

gadfly
Guest
gadfly

//”how did the hospital earn the profit?”//
Yes, feel free to put those words in my mouth. πŸ™‚

tony
Guest

Profitable non-profits aren’t bad unless they’re (passively or actively) exploiting the system. In fact, shouldn’t we be rooting for profitable hospitals? So many good hospitals need some profit year over year to fix up their dingy 40-year-old buildings and get some 21th Century IT.
trying not to put words into gadfly’s mouth, but he eluded to it. the question isn’t: “how much profit is considered excessive?” more so, it’s “how did the hospital earn the profit?” I’m sure we would give much more leeway for well-managed hospitals that make their patients and their communities happy.