By Adam Gaffney, M.D., M.P.H.
The Nation, July 16 2019
On Monday, Vermont Senator Bernie Sanders joined hospital staff, patients, and activists in a large protest outside the doors of Hahnemann University Hospital, a major safety-net hospital in northern Philadelphia. The demonstration came days after another rally at the hospital, attended by an estimated 800 protesters, last week. The crowds were not there to protest the hospital, but to save it. Hahnemann has been losing money, so Joel Freedman, president of the private-equity firm that owns the hospital, has decided that there is no choice but to shutter it for good—and possibly sell off its valuable real estate.
The closure of the hospital has already begun, and its effects are already palpable. A woman was recently struck by a car directly in front of Hahnemann but taken elsewhere, CBS reported, since the hospital relinquished its trauma center status last month. And last week Hahnemann stopped delivering babies. More than 800 pregnant patients received letters informing them that they would have to deliver elsewhere, according to a report by WHYY, despite worries about the lack of maternity facilities in Philadelphia. Meanwhile, hundreds of medical residents at the hospital are now rushing to find a new home where they can learn medicine.
“I am certain this is going to make waves in the health-care ecosystem of Philadelphia,” Kevin D’Mello, a physician who trained in medicine at Hahnemann and has worked there as an inpatient physician for six years since, told me. As D’Mello noted, the population of northern Philadelphia is already “one of the most underserved in the city.”
But things could get worse. After all, in the United States it is profitability—not the health-care needs of a community—that determines which hospitals stay open and flourish, and which wither and die. The story of Hahnemann is the story of not just a single urban hospital with a greedy owner but the dysfunctional and unjust way we finance health care across the nation.
Hahnemann was founded in 1848 as a center of homeopathy, but over the course of the 20th century it transformed into a major tertiary-care academic medical center with almost 500 beds. Designated the very first adult Level I Trauma Center in the city back in 1986, Hahnemann has long provided an array of specialty services, including organ transplantation. Today, the hospital cares for a predominantly low-income, publicly-insured, minority patient population. In 2017, some 17,000 patients were hospitalized there, and another 53,000 visited the emergency room, according to the Philadelphia Inquirer. But despite its public mission, Hahnemann has long been the property of for-profit corporations.
Tenet Health Corporation, a large national health-care company with a storied history of health-care fraud, purchased it in 1998. Just last year, Tenet sold it off to an affiliate of the private equity firm Paladin Healthcare. Now that company’s president Joel Freedman says that Hahnemann is hemorrhaging cash, and that he has no other choice but to shutter it. Others, however, have speculated that the hospital’s valuable property is destined to be used for luxury developments instead. A report last week in The American Prospect suggested that scooping up the hospital and selling it for parts (specifically, its valuable real estate) could have been the plan all along—the ominous start of a new trend as private equity investors eye the healthcare industry.
Regardless, a hospital closure is not an act of nature. The fact that a hospital can close because it is unprofitable is only possible because we allow it, and in this respect, Hahnemann is far from unique. More than 100 rural hospitals across the nation have closed in recent years, leaving many poor communities bereft of access to even basic health-care services. From 2004 to 2014, some 650,000 women of childbearing age in rural counties lost all access to obstetric services, according to a 2017 study. Such women, it should come as little surprise, are disproportionately poor and black.
Unprofitable wards (which also serve disproportionately poor communities of color) are closing within otherwise profitable institutions as well. As the The Nation reported last October, New York Presbyterian, where I trained in internal medicine, is in the process of closing its inpatient psychiatric ward at the Allen Hospital in Northern Manhattan. Critics say this is being done to make way for a lucrative spinal surgery center (the hospital contests that). And last Thursday, just as protesters rallied outside Hahnemann, community members and activists from Democratic Socialists for America, the New York States Nurses Association, and other groups protested outside the Allen Hospital’s doors to fight for the survival of its mental-health ward.
Meanwhile, even as some hospitals close, others are seeing rising profits, or embarking on aggressive capital expansions and acquisitions, propelled by fierce competition. Fancy new towers rise as rural hospitals fall, yet both have a common cause. The poverty of some of our hospitals and the rich fortunes of others are but two manifestations of a single pathology: a dysfunctional, profit-oriented system of hospital payment.
Could Medicare for All, as some have argued, save Hahnemann? The answer is yes, but the point is not merely changing who pays for health care, but how it is paid for. A well-structured single-payer system, unlike other health-care reform proposals, could indeed extract the profit motive from hospital financing. This would not only help save endangered hospitals throughout the country but also help transform them for the better.
For one thing, single payer can be used as a tool to directly push for-profit corporations out of the health-care delivery business altogether, by excluding them from participation in the public plan and buying out their facilities (in this respect, both single-payer bills in Congress can use bolstering). After all, for-profit providers have worse results—and often at higher costs. And as long as hospitals exist as businesses, they can close like businesses when their investors see better opportunities for profit elsewhere.
But investor-owned facilities are not the only problem. Whether hospitals are legally for-profit or nonprofit, most (to varying degrees) are profit-oriented. And to a large extent, they have to be, as a 2018 editorial in the Journal of General Internal Medicine described: Profitable hospitals expand, upgrade, beautify—attracting more patients and revenues—while unprofitable hospitals deteriorate, shed patients, lose staff, suffocate. That may be the law of market competition (which, not surprisingly, means that disadvantaged populations are often the worst-served), but that law need not govern our health-care system.
How would things be different with Medicare for All? Well, single-payer financing would allow us to separately fund hospitals’ capital costs—like new facilities or wards or major upgrades—with public funds. At the same, we can fully cover hospitals’ operating expenses through global “lump sum” budgets, as in Canada (or as proposed in the House Medicare for All bill). With such a financing model, there are no hospital profits, and so profitability ceases to be the criterion that dictates which hospitals open or close, and which expand and beautify. It would remove the incentive for hospitals to chase lucrative service lines, like spinal surgery, at the expense of unprofitable ones, like mental health. And it would ensure that we have hospitals, obstetric units, and mental health wards in the communities that need them—not just where firms think that they will be profitable.
Such a transformation is sorely needed. In her book In Sickness and in Wealth: American Hospitals in the Twentieth Century, historian Rosemary Stevens traced how US hospitals have long contained within their walls two contradictory identities. On the one hand, they are revenue-maximizing, expansionary, businesses. On the other hand, they are community institutions embodying our “hopes and ideals”—of science, but also of solidarity. Yet the two souls of the American hospital co-exist in an unstable equilibrium. More and more, however, we are seeing the business-identity emerge triumphant.
And that is what the struggle to save Hahnemann, and Allen Psych, is all about—to transform hospitals from the businesses they increasingly are becoming into the social institutions our communities deserve, and require.
Dr. Adam Gaffney is a pulmonary and critical-care specialist at the Cambridge Health Alliance and Harvard Medical School, and president of Physicians for a National Health Program.