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Jun 01

Hospital Greed Trumps Competition And Patient Care

Walmart. Remember the highly publicized protests against their expansion?

Imagine what it would have been like if the situation were flipped: What if Walmart protested about the unfairness of entrepreneurial businesses?

They’d argue that it’s unfair that a local hardware store isn’t required to have a money losing photo center, that it’s unfair that small stores offer better, individualized customer experiences leading to higher purchases, and that it’s unfair that a high-end stationer could “skim off” the high-end buyers of pricy birthday cards.

Ridiculous, you say? They’d be laughed at?

But that’s almost exactly the argument that Rich Umbdenstock, president and CEO of the American Hospital Association (AHA), made in May 2015 in testimony before the House Ways and Means Committee’s Health Subcommittee.

Essentially, the AHA urges that Congress should continue to make it illegal (due to Stark Law restrictions) for physicians to have ownership in new hospitals receiving federal health care program dollars, and that Congress should continue to keep a cap on the growth of already existing physician-owned hospitals.

The AHA complains that physician-owned hospitals provide limited or no emergency services. (That’s the “no photo center” argument.)

The AHA complains that physician self-referral leads to higher per capita utilization and costs. (That ignores that there’s similar or same incentives for a hospital employed physician to do the same thing and it ignores the underlying issue of whether the impacted patients required more items of service. That’s the “better customer experiences” argument.)

The AHA complains that physician-owned hospitals “cherry-pick” the most profitable patients and services. (That’s the “high-end buyers” argument.)

The bottom line is that the AHA’s position is that it’s “unfair” and a “conflict of interest” for physicians to refer their patients to physician-owned hospitals.

Yet, thanks to Obamacare, hospitals control more physicians than ever via employment and other “alignment.” In other words, they’ve created a class of “hospital-owned physicians.”

The AHA’s position, as voiced by Umbdenstock at that same hearing, is that it wants Congress to make it easier for hospital-owned physicians to refer to the hospitals which control them, because that’s all about teamwork between hospitals and physicians in providing coordinated care.

Let’s get this straight: If physicians own hospitals to create teamwork and provide coordinated care, that is bad. But if hospitals own physicians in order to create teamwork and provide coordinated care, that is good. No, that is total bullshit.

The same conflicts of interest exist. (In fact, I believe that there are greater conflicts of interest in respect of hospital-owned physicians who are beholden to the hospital for their livelihoods.) In fact, life is full of conflicts of interest. For example, isn’t it a conflict of interest for a hospital to “sell” a patient an aspirin for $20 per pill, when a bottle of 300 aspirins could be sold by Amazon and delivered to the patient in the hospital for approximately 4 cents per pill?

I can’t blame Mr. Umbdenstock and the AHA for trying. There’s big business in preventing competition. The AHA reports that it has nearly 5,000 member hospitals, health care system, and health care organization members, as well as 43,000 individual members. They don’t want to be put out of business. They don’t want to have to find new jobs. In 2013, the latest year for which the AHA reported data, the AHA had $124,434,189 in revenue, $7,404,973 in profit, and $187,738,745 in net assets. And, Mr. Umbdenstock received close to $2 million in compensation.

Have hospitals no shame? Don’t they care about patients? Have they allowed greed to trump patient care?

Oh, those are the arguments and sound bites the hospitals toss at physicians. Sorry.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.advisorylawgroup.com

 

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