Corporate hospitals: looking to profit from illness

This is a very interesting article that deals with corporate run hospitals and how they benefit from the current system dominated by private insurers. One interesting point it makes is that investors could be taking encouragement from the Massachusetts "universal healhcare" bill that funnels more people into private health plans. It also details a twisted system where profit is made by closing facilities and decreasing hospital stays -- regardless of the patients actual health needs. Of course, a single-payer system would be very bad for this system, and the prospect of the Massachusetts model of universal healthcare spreading in its place was very good news for those who invest in it.

Betting on a sick boom
By David Lazarus
San Franciso Chronicle

... "The Wall Street guys are betting that hospital utilization is going to go through the roof," said Sue Houck, a Boulder, Colo., health care consultant. "But their accountability will be less because they've gone private."

HCA operates 176 hospitals and almost 100 surgical centers in 21 states. In the Bay Area, it owns San Jose's Good Samaritan Hospital, Regional Medical Center of San Jose and Los Gatos Surgical Center.

"This deal augurs continued increases in health care prices, continued problems with access and continued frustration," Houck said. "It doesn't bode well for the consumer at all." ...

But health care experts say the only reason investors would funnel serious cash into hospitals is if they expect significant returns on their investment -- and that can only mean higher profits resulting from more medical spending, increased patient volume or both.

"Everyone in the industry is waiting for the Baby Boomers," said Paul Szklarski, chairman of the Health Industry Research Group, a New York consulting firm. "The presumption is that we're all going to be in the hospital soon.

"Probably not a bad bet," he added. ...

"If health insurance expands, this would be very positive for hospitals," Ginsburg observed.

It wouldn't address the underlying problems that cause health care costs to post double-digit increases year after year. But it would potentially allow millions of people now lacking coverage to seek medical treatment they might not otherwise pursue. ...

Transition to a single-payer system would almost certainly usher in a period of intense uncertainty for hospitals and other medical facilities as funding switches from private insurers to government coffers.

James Kahn, a professor of health policy at UCSF, said the buyout of HCA suggests that the money men behind the deal don't foresee a single-payer system being created in the United States anytime soon.

"I would assume that they're more comfortable with a future that's more like the present," he said.

That's what they're buying.