Non-profits - hospitals and others

These exchanges originated on the EQUAL Health Network listserve.  I aggregated them here on 1-18-15.  I hope the Comment feature will be useful for discussions.  Open to suggestions!  Ellen Shaffer  ershaffer@equalhealth.info

Interesting points especially the last sentence.

Jo Ann


From: John Troidl

Maggie,

Thank you for your note (as well as those of others).... I could not agree more!

Three additional comments......

1.  Long ago and very early in my career, I had a brief conversation but informative conversation with the head of the Federation of American Hospitals.  He said, and I quote, "We prefer to be called tax paying hospitals, rather than for profit hospitals".  There is a (good) point there.

2. Dignity made over $850,000,000 profit, ooops, "excess revenue over expense" last year.  They do a lot of good things.  And they MAKE A LOT OF MONEY!

3.  I took an econ class in business school called "Resource allocation in the non-profit sector" that included a good look at the hospital industry.  After a while it started to look like the for profits and the non profits behaved remarkably similarly.  (for example:  BOTH respond to investors because BOTH sell the financial instrument called "Bond").

This discussion has been good to flesh out this issue.... and now, from a public health perspective, let's do all that we can do to KEEP PEOPLE OUT OF HOSPITALS.... ALL OF THEM!  (except when they really, really need it).

Cheers,

John





On Wed, Jan 14, 2015 at 10:19 AM, Maggie Huff-Rousselle <mhuffrousselle@gmail.com> wrote:

There is nothing to guarantee that the term ?non-profit? means anything more than that the designated institution does not have to pay taxes on profits.  If the organization is growing, it has to make profits in order to cover cashflow needs.  Non-profits can be less efficient and have lower quality than profit-making organizations.  Those are the things we should be paying attention to: quality and efficiency (cost efficiency would incorporate executive pay).

Maggie
Maggie Huff-Rousselle







On Jan 13, 2015, at 9:47 PM, Tammy Pilisuk <bello6bello@hotmail.com> wrote:



I think it's a good point that if nonprofit hospitals really want to differentiate themselves that they need to do more than soul-searching, but some concrete tough-love advocacy. It's no wonder the general public is outraged when the Kaiser top exec earns a multi million dollar salary and we hear many non-profit hospital payment collection policies are similar to private hospitals. Let them (or the body politic) set a standard that makes it clear what the difference is.  To me, it's not always so clear.

Turning them all into for-profit would be the wrong direction. But giving them more of a charter to serve (and exec salary caps) would could help.



Tammy


  _____


Date: Tue, 13 Jan 2015 11:01:55 -0700
From: pat@pvhealthsolutions.com
To: equalhealthnetwork@lists.mayfirst.org
Subject: Re: [EQUAL Health] From Martha Livingston re: a California Healthline article.





Jo, you bring up a very good point as non-profit hospitals have been under fire for several years resulting in a whole group of rules and regulations at the Federal level that includes community assessments every three years that are required by the IRS of all agencies.  I?m not sure this is a bad activity for hospitals to understand their community but it has not been well linked with the ACA though some communities are attempting to do this.  Also, a new rule just this week was announced regarding how non-profits bill patients for their hospital bill.  (link to article below)  From the article I did not see that for-profits had to follow the same rule.  This doesn?t seem adequate in addressing the issue when some hospitals are left off and can continue to bill full charges versus discounted rates as negotiated with health plans.  I am all in favor for fixing our broken health care system and by no means do I support some of the actions hospitals


What about the big ?non-profits? who behave like corporations (i.e. Kaiser) and do not perform enough public interest work to really justify their status. I recall a famous pamphlet issues in the 1970?s (I think Ellen S was a co author if I recall correctly) called ?The Profit in Nonprofit Health care ? or some such. I think defending the ?nonprofit? sector uniformly is a bad idea. Same issues in higher education. (Harvard anyone?)

Joe Berry
------------------------------------------
Please use <joeberry@igc.org>

or go further back to articles published by PNHP founders in Socialist Review back when the Clinton Plan was being debated in 92 or so.

Joe
------------------------------------------
Please use <joeberry@igc.org>


There is evidence that for-profit hospitals behave differently (less efficient, lower quality, less accessible)  than not-for-profit.  One example of the literature on the topic is attached.

Robert Chernomas
Professor of Economics
University of Manitoba
Robert.Chernomas@umanitoba.ca



Hopefully, the point of these exchanges is that the profit versus non-profit status (as being the determinant of behavior/performance) is simplistic and often misleading.  The variables at play are more complex, and non-profits can be inefficient and provide poor quality.
Maggie
Maggie Huff-Rousselle
mhuffrousselle@gmail.com



The health economist Robert Evans has provided an analysis of why for-profit hospitals are more costly/less efficient and of lower quality than not for-profit. Inevitably in a country so heavily influenced by the Medical-Industrial-Complex bad practice will tend to drive out good practice even in structurally superior organizations, just less so.
Robert   Robert.Chernomas@umanitoba.ca


Hi Robert

While I certainly don?t mean to suggest that the non-profit versus profit status never has an impact, the article you sent is a brief summary that uses that topic as a wedge but does nothing substantial to explain differences. let alone analyze them.  It is a nice opinion piece, written for a Canadian audience, NOT for people who are not working within the fractured and complex payment/reimbursement system in the US.  Few readers in Canada ? and it would seem the author ? understand the US payment/reimbursement system and the complications and wastage it creates. He writes of a ?mixed delivery? system, which many Canadians fear, where more affluent segments of the population can opt for a private sector that may allow shorter waiting times and other possible advantages.  Such a private sector would also allow providers to opt into private payment or (in the examples he mentions) supplement the regular provincial payment system with additional charges.  Canadians use various terms to describe what he calls a ?mixed? system, but a major underlying issue that he identified (but does not identify as central) is the duality of payment and funding ? which is just what most of the people on this group have been discussing for years ? the fragmented complex payment/reimbursement system is a major source of wastage, inefficiency and poor performance in the US system.  In Canada, both financing and payment are largely controlled by the federal and provincial governments; this steam lines the system.  It even reduces the need for regulation.  Hospital costs are largely controlled through budgets.  Physicians, who are generally private practitioners, are fee-for-service, with the fees set by a single payment agreement.

Most of the article has nothing to do with explaining differences between profit versus non-profit.  It is about citizens and providers opting out of the national/provincial systems, and concerns about what will happen if that trend ? which has begun in some provinces ? continues to grow. One could argue that the major source of identity for Canadians is not being American, and we always fear becoming like the US.  Sometimes we are described as cheddar cheese: no one?s favorite cheese, but no one dislikes it.  We?ve also been described as unarmed Americans with health insurance.  It is not just the widespread coverage of insurance that makes the difference, although that avoids catastrophic care financial ruin for individuals and families, it?s the way the system is financed (where the money comes from and who controls it) and the way it is paid out.  The is arguably THE difference between the US and Canada, not the profit versus non-profit status of facilities.

Of course, the Canadian system has its weaknesses, but the way the system is financed is the distinguishing characteristic that makes it much better performing than the US.
Maggie
Maggie Huff-Rousselle

The technology, the bureaucracy and the profiteering system are smothering
the good docs.
Jeoff Gordon
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Hi Maggie,

You are quite right that article does not explain why for-profits (FP) are structurally different than not for-profits (NFP)-I just sent it to point to the evidence in support of the idea.  The US system is uniquely inefficient and unfair-I was just trying to point out that  FP sector has its own special character.There are a number of articles that contrast FP with NFP inside the US that provide details as to why they differ with respect to efficiency and quality.  Bob Evans in his old textbook "Strained Mercy" (among other sources) provides a theoretical framework as to why when their are stockholders involved health organizations behave differently. In our book "To Live and Die in America: Class, Power, Health and Health Care" we try to summarize both the theoretical and empirical literature on this topic for the US as well as the history of health care reform.   A Canadian style single-payer system is what they need but can't get because those who profit from it have the power to determine the structure of the system.

Robert

Jeoffry B. Gordon <paradocs21@gmail.com>	12:17 PM (20 hours ago)
to Gail, Tammy, me, JoAnn, Maggie

The whole status of not for profit hospitals in today's health system is a basic farce. There is no doubt that a for profit chain can gain huge tax advantages by having a couple of nonprofits in their system and dumping a lot of (?trumped up) expenses on them. Even the status of ordinary "not for profit" hospitals is weird. See an excellent recent study by San Francisco's Greenlining Institute: "Community Benefit and Missed Opportunities." (You can google this.)

The feds finally worked out a reporting form where these hospitals have to report their "charitable activities and contributions." I doubt that many of them even come close to giving benefits to the community which even approximate how much they save in taxes. This is especially perverse because I bet they calculate their charitable contributions with their chargemaster prices which Brill so brilliantly trashes. It is even worse and more appalling in California where State regulation (which the Greenlining Institute is working to eliminate and the hospital lobby has ardently supported) allows hospitals to count as charitable something called "Medicare underpayments" !!!

Jeoffry B. Gordon, MD, MPH

On Fri, Jan 16, 2015 at 2:53 PM, Gail Gordon <ggordon@njcu.edu> wrote:

Hi all,

I have been looking at the acquisition of non-profit hospitals by for-profit chains.  It is picking up steam in NJ.  Perhaps you can help me with one thing that I came across. Prime Healthcare (based in CA) GAVE two of its hospitals to its foundation, turning them into non-profits. I can't seem to figure out why they would do this.  Obviously they think it is in their interests to do so.  They praise themselves for this action.  I'm thinking that perhaps they can get a huge write-off doing this plus the taxes they will save as non-profits.  Help anyone?

Gail

Gail Gordon, DrPH
Professor and Graduate Coordinator
New Jersey City University
2039 Kennedy Blvd.
Jersey City , NJ 07305
201-200-3431

Government Shutdown Threatens Public Health

CPHA-N, EQUAL Health Network, CPEHN
http://bit.ly/fBopF8

The public’s health would be a collateral casualty of caustic ideological battles over the national budget. Republican demands to defund family planning and to stop EPA regulation of greenhouse gas emissions have brought the federal government to a standstill. Crippling the popular Planned Parenthood clinics and lowering air pollution standards would profoundly damage the health of the nation and of California.

Women and men in many of the poorest neighborhoods rely on Planned Parenthood facilities for basic health care services, family planning, HIV care and cancer screenings. The Planned Parenthood Affiliates of California, Inc., has been instrumental in public policy for the health of women and girls.

These ideologically-driven "social riders" to the proposed budget would also eliminate funds for implementation of the Affordable Care Act and the new consumer protection bureau, leaving hundreds of thousands of families struggling to afford medical care.

Cuts could also fall on the Center for Infectious Diseases & Emergency Readiness at the University of California Berkeley, the only research center in the United States on radiological and nuclear public health preparedness.

The proposed $60 billion in cuts that Congressional Republicans have demanded this year, and trillions to come, would devastate the very projects that could revitalize jobs and ensure prosperity. Millions of people’s livelihoods depend on publicly funded transportation, infrastructure, education, and health care.

In addition, the shutdown itself will weaken the fragile economy, immediately placing 800,000 federal workers on furlough, suspending paychecks for soldiers and delaying business loans.

We need to develop a comprehensive solution that revitalizes federal revenues, while requiring those who benefit the most from our society’s infrastructure to pay the most to ensure its upkeep. Taxes for corporations and for wealthy individuals declined over the last decade, resulting in significant income disparities between the rich and the poor in the U.S., and leading to health inequalities. Reversing tax giveaways to the super-rich and the nation's largest corporations could raise $4 trillion within a decade.

We stand in support of reproductive and public health and against the threat of climate change! We urge our federal representatives to insist that these important programs continue!

California Public Health Association-North www.cphan.org
EQUAL Health Network www.equalhealth.info
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Health Reform: Declaring and Winning Victories on the Way Forward

Invitation to a Discussion

Many are mad as hell this election season, including some progressives. Absent the funding of the madly rich and insanely right-wing Koch brothers, what are we to do?

For one thing, take a sober look at the policy and politics associated with the Affordable Care Act.

This is not the single payer system many staunch health care reform advocates - including me - preferred, but lacked the power to enact. As we continue the campaign for a single payer, it is essential to recognize, vigorously defend and advance the victories we achieved in the Affordable Care Act, in order to preserve the gains for people in need and also to shore up the valuable activists, and activism, we will need for what is going to be a long haul ahead.

Here's what the ACA accomplishes, what single payer systems do, why we're absolutely right to continue to advocate for them, and how we can shape policy to get there from here.

What does the ACA accomplish? The U.S. health care system will do a better job of treating illness and improving health at an affordable cost. The Medicare Trust Fund will be solvent for an additional 12 years, through 2029. There are substantial improvements for lower and middle income people, and immediate benefits for women, younger people, seniors and small businesses. Importantly, the ACA creates policy space to continue efforts to cover everyone while controlling costs, goals that are popular with the public. It accomplishes these objectives in part by imposing new progressive taxes and fees on the wealthiest 2% of the population and on employers.

Politically, the ACA opens opportunities to challenge corporate power at the national level, in the formation of extensive regulations. It throws some leverage to the states, which progressives can use to advance our goals of equitable, quality, universal, affordable health care.

The law includes compromises that call out for revision, particularly on affordability, and on coverage for immigrants and for reproductive health care. And the political process that got us here will be grist for analysis for decades to come.

But it is just not true, as some have characterized it, that the law is primarily a victory for business as usual by the insurance industry. Furthermore, the fight to undermine and defeat the law unquestionably empowers and invigorates the most predatory anti-government political and financial interests in the country. Since the facts don't serve their agenda - to profit by destabilizing our social and financial security, including dismantling Medicare - they rely on hyperbole and distortion to mobilize the public's complicity in opposing our own real best interests. In contrast, we can and must remain critical while carefully examining sweeping generalizations that don't fit.

Single Payer: Getting There from Here

Single payer systems funnel all payments for health care to one collection point - usually a state or national government. This single payer then pays all the health care providers: doctors, hospitals, drug companies. There is overwhelming evidence that single payer systems are more cost-efficient and affordable, along with their many benefits for equity and quality of care.

This is different from our current system in at least two ways that are key to controlling health care costs.

• First, it is administratively efficient. It eliminates the middleman: the proliferation of private insurance companies that take a bite out of every health care dollar for the administrative service of paying the bills. These insurance companies, both for-profit and non-profit, now rake off about 30% or more of our insurance premiums, using ploys that at the same time restrict access to necessary health care and inflict great suffering on ailing humanity. They also add to the administrative burdens of doctors and hospitals.

• Secondly, it moderates prices. It gives a powerful negotiator - the government - the authority to negotiate prices with the health care industry: hospitals, doctors, medical supply companies, drug companies.

Largely for these reasons, single payer proposals are fiercely attacked, maligned and misrepresented and in all manner just blocked in the halls of power by the industry, which profits nicely from this mess.

The state and federal governments are now writing the rules for implementing the Affordable Care Act. Advocates can help to shape these rules to get us closer to administrative efficiency, and to expand the public sector's purview over prices. Some examples:

• In 2014, new insurance Exchanges will standardize health insurance plans. People who buy insurance now as individuals or in small groups will be grouped into much larger pools, sharply reducing cost-shifting. Advocates have the opportunity to craft and support state laws implementing the exchanges that can push limits on standardizing health plans and require financial transparency.

• The law sharply expands the number of people covered by public sector health plans. For the first time Medicaid will cover everyone under 133% of the federal poverty level, regardless of health status. State governments already do negotiate drug prices under Medicaid, in which enrollment will grow by almost half by 2014. State laws to adopt a public option would further expand the number of people who receive health care either paid for or provided directly by the public sector.

• There are numerous opportunities to regulate, review and otherwise limit premiums, depending on the rules adopted by HHS, and state implementation laws. The current policy debate on how to define and enforce the Medical Loss Ratio is an important example.

• The law also draws on the public's control over Medicare to address some of the underlying drivers of increasing health costs through new measures such as comparative effectiveness research and payment reforms to encourage more cost-effective delivery systems. It also expands primary care and public health.

• Finally, as soon as 2017 - maybe sooner - there is a defined process for states to prepare for and enact alternative systems, including single payer.

What can we do now?

* Fight for the strongest possible role for the exchanges to negotiate prices with insurance and drug companies and to oversee benefits, etc.

* Create a public option to be included in the state exchange

* Expand Medicaid as a building block for the future — the more people in public programs, the better.

* Use the Medicaid infrastructure for the state exchanges instead of contracting to private companies.

* Push for states to have a better Medical Loss Ratio than the ACA requires - join EQUAL's campaign!

* Fight to defend and extend Medicare.

* Pursue campaigns for single payer legislation.

The corporate media surround us with messages - and messengers - that exhort us to succumb to cynicism (nothing will ever work, they'll always sell us out). Voluntarily taking ourselves out of the real health care fights of the day is tantamount to capitulation. Effective strategies for building the power we need will require and emerge from engagement as well as resistance. Advocates can rebuild public awareness and momentum for single payer systems, and at the same time support legislation and regulations that maximize the progressive aspects of the ACA. If done well, our work on the ACA will build the pathways we need to a single payer system.