Here’s how it works: hospitals calculate the gap between
Medicaid payments and the hospital’s self-determined costs for procedures. That
gap constitutes their “community benefit.” Thus, the Affordable Care Act has
been a real financial boon to them. It brought millions more paying customers
into the field, such that the revenue in the top seven nonprofit hospitals
increased by 15 percent, while charity care—the most tangible aspect of community
benefit—decreased by 35 percent.
With charitable care being optional, it stands to reason
that nonprofit hospitals are often the most profitable: they don’t have to pay
taxes. They also benefit from tax-free contributions from donors
and tax-free bonds for capital projects. Plus they’re allowed to include
training residents, fellows, and other clinical staff as community benefit. The
most profitable nonprofit hospitals tend to be part of huge health care
systems. Monopoly hospitals are known to charge more than non-monopoly
hospitals.
The average chief executive’s package at nonprofit hospitals
is worth $3.5 million annually. From 2005 to 2015 the average chief executive
compensation in nonprofit hospitals increased by 93 percent. Nurses got 3
percent.
OK: While I’m at it, I’ll throw in a couple more factoids
about health care: patient care generated $3.6 trillion in 2018, an amount
shared by your hospital, doctor, and insurer. Also, according to the Bureau of
Labor Statistics, the poorest people in this country spend 35% of their pre-tax
incomes on health care and the wealthiest spend 3.5% of their income on health
care, but the wealthiest spend an average of $8,720, compared to $2,119 for the
poorest people. No surprise there.
For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.
For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.