March 15, 2023

Podcast host Joe Sparks considers the federal government’s swift action on behalf of depositors with Silicon Valley Bank, and wonders why similar action isn’t taken whenever a health insurance claim is denied.

“It’s time for the government to start protecting normal people who suffer … when they are denied care by health insurance companies,” he says, arguing that such denials are almost never justified—but adding that “a simpler solution would be to implement single-payer Medicare for All.”

Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

By Brenda Gazzar
Code Wack Podcast, March 13, 2023

How does running a hospital like a business run counter to providing reliable and affordable healthcare? How would having Medicare for All change the way hospitals are financed and what would it mean for patients, doctors, and the hospitals themselves?

To find out, we spoke to Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and a lecturer in medicine at Harvard Medical School. He also serves as a staff physician at Montefiore Medical Center in the Bronx and is the co-founder of Physicians for a National Health Program. This is the second of a two-part series with Dr. Himmelstein (part one available HERE).

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Transcript

Dispatcher: 911, what’s your emergency?

Caller: America’s healthcare system is broken and people are dying!

(ambulance siren)

Welcome to Code WACK!, where we shine a light on America’s callous healthcare system, how it hurts us and what we can do about it. I’m your host Brenda Gazzar. This time on Code WACK! How does running a hospital like a business run counter to providing reliable and affordable health care? How would having Medicare for All change the way hospitals are financed and what would it mean for patients, doctors, and the hospitals themselves?

To find out, we spoke to Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and a lecturer in medicine at Harvard Medical School. He also serves as a staff physician at Montefiore Medical Center in the Bronx and is the co-founder of the single-payer advocacy group Physicians for a National Health Program. This is the second of a two-part series with Dr. Himmelstein.

Welcome back to Code WACK!, Dr. Himmelstein.

Himmelstein: Thanks for having me.

Q: In 1987, you co-founded Physicians for National Health Program. What inspired you to do that?

Himmelstein: Well, the experiences of our healthcare system really making it so difficult to care for patients and many of my patients at public hospitals where I work, being unable to get the care they needed and deserve. At the same time, seeing that our country has ample resources to provide excellent care to everyone if they were distributed in a reasonable way and I spent some of my time during my career working at fancy private hospitals. During my residency, one or two months we rotated through a fancy private hospital and one month a year I used to be the attending physician, the staff physician on the wards at Mass General Hospital, one of Harvard’s banner teaching hospitals. So I saw excellent care that was available to privileged patients and often resources at those hospitals that went unused because the hospitals actually oftentimes had surplus resources. And (in the) meantime, the public hospitals where I spent most of my time working, patients weren’t getting the care they needed.

So my partner, Steffie Woolhandler and I looked around at what alternatives there were for how to finance health care and we saw that other countries really did it better and they had lessons to teach us about how you could construct a healthcare financing system that was both fairer, more efficient and improved health outcomes.

Q:  you give an example?

Himmelstein: We particularly looked at Canada because Canada’s health care system in many ways is very, very similar to that in the U.S. In fact, until we passed Medicare and Medicaid in the mid 1960s and Canada passed its national health insurance scheme around that same time, our healthcare systems and financing systems were almost identical. So it was easy to see how we could make a transition to national health insurance schemes like Canada, which is not perfect, but has huge advantages. So we really used that as an initial model and thought about what it would take to transition the U.S.

Q: Got it. Great. It’s no secret that hospitals, even nonprofit ones, are big businesses today in America. How are the incentives of running a business at odds with community needs for reliable access to affordable health care?

Himmelstein: Well, hospitals want to take in more money than they pay out to their staff and their suppliers. They want to make a profit at the end of the year, whether they’re nonprofit or not and that’s actually pretty much required, necessary if the hospital is going to keep going under our current financing system because in order to upgrade its facilities, stay modern, buy new equipment, renovate the rooms and wards when they get outdated, keep the ORs up to date, hospitals need to have money in the bank to pay for those new investments and the way you get money in the bank under this system is to take in more money each year than you pay out. Or the other alternative is to say, ‘well, we’ll borrow the money,’ but the only way you’re able to borrow it is if you assure the bondholders or the banks that you’ll pay them back from the surpluses from the profits you accrue in future years, so our system says to hospitals, you have to make a profit or your future is in doubt.

Q: Right. Thank you. What toll do standard business practices like mergers and acquisitions, consolidation and corporatization take on patients and doctors today?

Himmelstein: Well, increasingly the people who run hospitals have not just said, ‘well, we want to make sure our hospital can survive, but we’re going to really run up a huge surplus and become an extremely successful business and that’s going to allow me personally to be paid much more.’ So when I was first a doctor, the hospital CEO was paid like a doctor – handsomely paid. Now they’re routinely paid in the millions, sometimes tens of millions of dollars.

Oh, wow.

Himmelstein: So if you make a huge profit, you’re able to say, ‘well, I ran this business so wonderfully that the hospital is making a big profit and I deserve a huge paycheck and I can build the empire and assemble more power that way.’

Q: And what about the patients?

Himmelstein: And it impacts the care in multiple ways so increasingly the hospitals control what the doctors do. So 30, 40 years ago, the doctors were pretty much independent of the hospitals so the doctors mostly were not paid by the hospitals, they were paid directly by their patients and the hospitals didn’t rule over the doctors. Nowadays, most doctors are employees of the hospitals where they work or of group practices that are kind of a subsidiary of those hospitals. So the hospitals can really dictate to doctors much more what they need to do and they’ve really passed down many rules, regulations, surveillance about what we need to do that’s going to be profitable for them.

Q: So how do you feel knowing that that’s the case today?

Himmelstein: Well, I think most doctors are really horrified at it so that’s the root I think of a huge amount of doctor burnout and dissatisfaction. The bureaucratic stuff they’ve imposed on doctors is crushing. The average doctor is now spending, oh, something like 20%, 30% of their total time on paperwork, much of it imposed by their hospitals.

Q: Wow. That’s a lot of time.

Himmelstein: Yeah, we’ve become box checkers and our incomes in many cases depend on doing what’s profitable for the hospital. So you now have hospitals saying you can make bonuses of $30,000 or $40,000 a year if you do what’s called coding. You attach diagnoses that are profitable for the hospital to your patients.

Q: Wow. How do you think that affects the behavior of doctors?

Himmelstein: Oh, I think if you’re offered $40,000 for doing what the hospital wants, most of us try and do it.

Q: Wow. So attaching a diagnosis to somebody who you, I mean, would you say that people would do it even if they don’t think their patients have that diagnosis?

Himmelstein: Well, what they do, and I think this is routinely done, is stretch the limits. So it’s not that they don’t have that diagnosis, but there are these arcane rules about what makes money for hospitals. So if a patient had asthma 10 years ago but they no longer have any asthma symptoms, if you write down in the chart ‘asthma not active at this point,’ that counts. That’s profitable for the hospital. It’s medically not meaningful at this time. So you’re not lying, you’re not doing anything to harm the patient, but you make the hospital and maybe the insurance plan affiliated with the hospital lots of extra money and some of that’s going to trickle down to you.

Q: Interesting. Thank you. So we touched a little bit about this in the last episode, but can you explain how hospitals are financed today and how they would be paid under Medicare for All?

Himmelstein: Well, at this point, hospitals bill patients or their insurance plans for each hospital stay generally, and depending on what the insurance is, they may get more or less. So a patient with pneumonia, with insurance from a private insurance plan, generally the hospital gets paid more than the same patient if they’re covered by Medicare and much more if that patient is covered by Medicaid. And if they’re uninsured, the hospital will bill a patient themselves and try and collect from them. And sometimes hospitals get some money for uninsured patients from government funds. So there are multiple streams of payment. There’s private insurance, there’s Medicaid, there’s Medicare and patients themselves, both the uninsured and then co-payments and deductibles that patients have to pay even if they are insured in many cases. So the one impact of that is that some patients bring in more money than other patients do.

If you have private insurance, the hospital gets paid more than if you have Medicare and Medicare more than if you have Medicaid. And in most cases either of those more than if you’re uninsured. Single payer would really change that in two ways. One is everyone would have the same insurance, so there’d be no distinction among patients so there’d be no more for Sally than for Alice. And that’s one important piece. But the second is in countries like Canada where everyone has the same insurance, generally hospitals don’t bill for each patient and each time they’re admitted, they get paid one lump sum amount each month for their operation, much like a fire department gets paid in the U.S. So the Canadians and people in many other countries have said, ‘why would we bother trying to figure out how much it costs to care for Sally and how much it costs to care for Alice?’

Our concern is what does it cost to run the hospital and take care of everybody whom they take care of. So we’ll just pay the hospital a lump sum and that eliminates a huge amount of paperwork both for the hospital and for the organization doing the payer. So for the hospital, it means you don’t have to keep track of who got every bandaid and aspirin tablet, try and figure out what you can squeeze out of each patient’s care and for the payer, it means again, you don’t have to pay for that stuff and go over each of those bills in that kind of detail.

Hmm, I see.

That came home to me many years ago visiting a friend who was hospitalized at Toronto General Hospital, at that time a big really what’s called tertiary care, so a highly specialized hospital with a full range of services.

And the billing office at that hospital when we looked was three or four people whose main job seemed to be to send bills to Americans who happened to wander across the border, and when we got back to Boston where I was living at the time, we went and looked at the billing office at Massachusetts General Hospital, which was roughly the same size and same range of services and back then they had 352 full-time equivalent personnel in the billing department. Not because they were inefficient, but because that’s what they needed to do to get paid and since then, they’ve accumulated I think many more people than that. So the difference in the way a single payer system would pay for hospital care is really twofold. One is that there would be no financial distinction among patients. And the second is that you’d eliminate the need for the kind of detailed billing and paying that drives up the administrative costs and causes tremendous waste in our healthcare system.

Q: Right. I’ve heard people kind of who oppose single-payer, who have concerns about it, say things like, well, if I am willing to spend more money, if I have and I’m willing to spend more money, why wouldn’t I get the convertible, for example, instead of the Toyota Corolla? But is that really a fair analogy in the case of single payer, are they missing out on better care If it’s all one comprehensive insurance plan?

Himmelstein: Well, you know, the data actually shows that Canadians on average get better care than Americans do and even wealthy Americans have shorter life expectancies than average in most other wealthy nations. So I think the worry that Canadians or people in other countries with this kind of egalitarian national health insurance are not getting good care is misplaced. In fact, you know, it’s sort of a weird thing I guess. Rand Paul a few years ago got his hernia repaired at the Shouldice Clinic in Ontario, which is a world famous hernia repair specialty hospital and his spokesperson said, ‘well, it’s a private hospital. It’s not part of the Canadian healthcare system,’ which just isn’t true. In fact, when we looked on the website of the Shouldice Clinic – they have a provincial health insurance plan. So there are 10 different plans, I guess up there that each province has its own plan, but they’re all very similar.

Any Canadian with health insurance from their public plan can walk into the Shouldice clinic without an appointment and start their care and have their care fully covered with no co-payments, no deductibles whatsoever. So in fact, we can deliver very high quality care to the entire population if we organize and finance our care in a rational way. Now in any system, there’s a top surgeon and a surgeon who you might want to not go to quite as much and the surgeon with a better reputation is going to have a little bit longer waiting list. In fact, in New York at this point, there are surgeons with months-long waiting lists to get care. The question is whether the people at the front of the queue ought to get there because they’re wealthier or because they’re the people who need the care the most? And as a doctor, my view is, you know, it’s the people who need the care the most, who actually ought to be at the head of the queue. And to say to a kid with leukemia, you don’t deserve the top quality care because your parents aren’t rich so you’re going to die and the rich kid is going to live, that’s criminal.

Q: Right. Such a good example. Thank you. So how would having a single-payer system affect patients and doctors?

Himmelstein: It would tremendously simplify patients’ lives. So every hospital in the entire country, I mean, again following the Canadian model, would take your insurance and your insurance would be the same no matter who you are, no matter where you are. You’d have complete coverage, you would not be responsible for any of the bills. So you wouldn’t have to worry about any out-of-pocket costs. You’d have the freedom to choose any hospital. Many of us now have, particularly with private coverage, have plans that limit where we can go and that would be abolished and it would mean that there’d be no financial distinction among patients. For doctors, it would simplify our lives. It would say you don’t have to spend your time worrying about whether your patients can afford this. The amount of paperwork you have to do for billing and for the f inancial manipulations of your practice or your hospital would be tremendously cut and we’d be able to actually practice medicine without the ridiculous stuff that goes along with it today.

Q: Right. And just as doctors wouldn’t have to worry about whether their patients could afford the treatment, patients themselves also wouldn’t have to worry about that.

Himmelstein: Absolutely.

Q: And how would this affect the hospitals?

Himmelstein: Well, I would say to hospitals, first of all, you would need to transition many people in your staff who are doing useless and maybe even harmful things to doing useful work. So our estimate is that there are several hundred thousand people doing useless paperwork in hospitals today and we’d need to find different and hopefully useful work for them. And many of them could surely be deployed within hospitals to fill in the gaps that we have now andthe personnel shortages. So that’s one thing that would affect hospitals. And one of the other pieces for hospitals is that the lump sum payment, that monthly payment you get from the National Health Insurance plan, that would be to cover your work today and whatever you don’t spend on your patients that you would have to give back. So you wouldn’t be accumulating any surpluses or profits. You wouldn’t have an incentive for playing the kinds of games you have today.

Instead, if you want a new building or an upgrade of your facilities, you would apply for a grant from the National Health Insurance Program and they would judge the needs of the communities and see, you know, is this the biggest need for the billions and billions of dollars? This year some, I think $150 billion we’re going to spend on new what’s called capital investments in health care. Instead of that money being allocated based on which hospitals are profitable or not, it would go into a fund and there’d be a regional organization that would evaluate where the investments are most needed.

And again, to give you an example, you know, we have parts of New York that are really medical deserts at this point and where the hospitals are kind of run down and I said before the roofs are leaking. And those hospitals obviously ought to be at the front of the line for the new investments. On the other hand, Mass General, which is already kind of a medical palace, is building a new $2 billion building up in Boston. I’m not sure that would’ve been the highest priority in that city. So it would change hospitals’ behavior by saying to them, you’re not actually going to be run as a business because your goal is not going to be having a profit at the end of the year because you won’t be able to have a profit one way or the other.

Thank you, Dr. David Himmelstein.

Do you have a personal story you’d like to share about our wack healthcare system? Contact us through our website at heal-ca.org.

Don’t forget to subscribe to Code WACK! wherever you find your podcasts. You can also find us on ProgressiveVoices.com and on Nurse Talk Media.

Code WACK! is powered by HEAL California, uplifting the voices of those fighting for healthcare reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

By Brenda Gazzar
Code Wack Podcast, March 6, 2023

What’s the story behind the EMTALA patient protection law of 1986, which requires hospitals to stabilize or treat patients who are in a health emergency regardless of their insurance status or ability to pay? What has this law done for patients and what does it mean for hospitals?

How does the current way hospitals are paid incentivize them to pass the buck on uninsured patients?

To find out, we spoke to Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and a lecturer in medicine at Harvard Medical School. He also serves as a staff physician at Montefiore Medical Center in the Bronx and is the co-founder of Physicians for a National Health Program. This is the first of a two-part series with Dr. Himmelstein.

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Transcript

Dispatcher: 911, what’s your emergency?

Caller: America’s healthcare system is broken and people are dying!

(ambulance siren)

Welcome to Code WACK!, where we shine a light on America’s callous healthcare system, how it hurts us and what we can do about it. I’m your host, Brenda Gazzar. This time on Code WACK! What’s the story behind the EMTALA patient protection law of 1986, which requires hospitals to stabilize or treat patients who are in a health emergency regardless of their insurance status or ability to pay. What has this law done for patients and what does it mean for hospitals? To find out, we spoke to Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and a lecturer in medicine at Harvard Medical School. He also serves as a staff physician at Montefiore Medical Center in the Bronx and is the co-founder of Physicians for a National Health Program. This is the first of a two-part series with Dr. Himmelstein.

Q: Welcome to Code WACK!, Dr. Himmelstein. Tell us a little bit about yourself and how you became a Medicare for All supporter.

Himmelstein: I’m a doctor. I grew up in New York and really intended to be a doctor, taking care of poor people and contributing to the care of oppressed communities and found that the healthcare system wouldn’t let me. There were so many barriers to the adequate care of people in need that it just became impossible to do my job well under the healthcare system as it is. So I got involved in what would we need to do to fix the healthcare system.

Q: Thank you for that. We’re going to talk about hospital financing today, but we’d like to start with your 1984 study “Patient Transfers: Medical Practice as Social Triage.” It highlighted how transferring patients from private to public hospital emergency rooms can negatively affect their health and outcomes. Can you briefly tell us about that?

Himmelstein: Well, I was a resident at the public hospital in Oakland, California along with many other residents. We were disgusted at the mistreatment of our patients by private hospitals that were afraid they were going to lose money if they took care of uninsured people. So they routinely shoved patients who were coming to their emergency rooms who didn’t have insurance into ambulances to send them to us at the public hospitals and many of them were clearly worse off because of often long ambulance rides when they were gravely ill. So the group of us at the public hospital at that time decided to document what we were seeing on a routine basis and really found that there was, when we looked at it systematically, a lot of harm being done to our patients.

Q: You mentioned that many of them were uninsured. What other demographic did these patients have?

Himmelstein: Because lack of insurance is much more common among people of color, many were people of color, so a lot of them were Black people, particularly because Oakland at that time had a very large Black population and not very many Latinx folks and so they were by and large poor people, people of color, uninsured people.

Q: Wow. And so did you find that one of the main reasons that they were being transferred was because they were uninsured?

Himmelstein: Well, occasionally they would say that in the medical record openly, but more often they wouldn’t say it openly. But it was pretty obvious they were coming from fully equipped private hospitals that had doctors who were perfectly capable of caring for these patients, but they weren’t going to get paid or were afraid they weren’t going to get paid and that was the motivation.

Q: Mmm-hmmm and I imagine some of them had Medicaid as well?

Himmelstein: Some had Medicaid but far more were uninsured than had Medicaid because at that point in California, Medicaid wasn’t that bad a payer. So they would take care of Medicaid patients more readily than the uninsured.

Q: Oh, got it. Okay. Thank you. Did you come across a specific patient whose story moved you while doing this research or even before you launched the study?

Himmelstein: Well, there were a whole avalanche of patients. I guess really two come to mind. One was a young woman who was hit by a truck and taken to a fully equipped private hospital where they did x-rays and found she had multiple broken bones and a chest x-ray that showed that likely her aorta, the largest artery in the body was damaged. And they shipped her, I think it was about 30 miles across the county to us where we confirmed that in fact she did have a grave injury to that blood vessel and we didn’t actually have the capability of performing the surgery she needed because the surgical program, the specialized surgical program that could do that had been closed at our public hospital because it was a lucrative service and the private hospitals basically wanted that and didn’t want to leave it to our public hospital. So we very urgently transferred that young woman to a nearby public hospital that could do the surgery that she needed and then it would be paid for at the county’s expense.

Oh, wow.

Himmelstein: I guess another was a gentleman who was taken after an automobile accident to a hospital owned by the Kaiser Health Plan and he was apparently thought to be uninsured. That’s what the note said from Kaiser and transferred to us at Highland fairly nearby actually and when he arrived he had bone and brain literally showing through a wound in his head and we found he also had a broken neck. He miraculously was not quadriplegic but underwent emergency surgery to stabilize his head wound and his broken neck. And apparently did okay. It turned out he actually was a Kaiser member, but they hadn’t initially found him in their files when he was taken there and when they found out that he was a Kaiser member, they demanded that he be transferred back to Kaiser immediately because they didn’t want to pay for his care at the public hospital. So I guess those two cases kind of stick out in my mind.

Oh my gosh, they both sound so extreme. I’m sure these kinds of things happen much more than the general public realizes.

Himmelstein: Well we found quite a number of people who were admitted straight to the operating room or to the ICU so these were many of them very sick people.

Q: Right, right. The woman that was hit by the truck. So she was transferred two different times?

Himmelstein: Yeah, both of these were transferred two different times. Yeah.

Q: Wow. And do you happen to know how the woman who was hit by a truck fared?

Himmelstein: We were told that she did live. I don’t know more than that.

Q: Okay. Wow. Really powerful stories. Your study resulted in new legislation to protect emergency room patients who couldn’t pay for their care. Is that right?

Himmelstein: Our study and it was done again with a number of colleagues and similar studies from other public hospitals around the country – so the public hospital in Chicago and one of the public hospitals in Tennessee. The doctors there found similar things going on and we later learned that Senator Kennedy’s office became aware of these studies and was the motivation for him to propose this law that requires hospitals to stabilize patients before refusing them care. So they can still refuse care, but if you’re in a life-threatening condition or in active labor, they have to take care of you.

Q: Wow. Has that happened where they’ve actually transferred people in the midst of labor?

Himmelstein: Oh I’m sure it did.

Q: Unbelievable. And what is the name of that law?

Himmelstein: It’s the Emergency Medical Treatment and Active Labor Act. EMTALA. It’s known as E-M-T-A-L-A.

Q: Thank you for that. So let’s connect the dots to hospital financing. The EMTALA law has been controversial in part because of the cost to hospitals of caring for the uninsured. What can you tell us about that?

Himmelstein: Well, what it says to a hospital is you actually have to take care of someone if they’re in a life-threatening condition, even if you may not be getting paid for it. And some hospitals say, well that’s a money loser and it’s going to put us in financial straits. And probably they’re right for some hospitals there are grave financial problems that they’re under and caring for uninsured patients makes things worse. So on the one hand, they want to do something terrible and on the other hand, one can see why they would want to.

Q: Hmmm. Got it. Let’s shift forward and look at how hospitals fared during the COVID pandemic. We know as an NPR headline pointed out that hospitals serving the poor struggled during COVID and wealthy hospitals made millions. Why is this?

Himmelstein: Well, the hospitals got huge federal bailouts from the federal government. So they stopped – by and large – doing a lot of the elective care that’s most profitable for them. So things like joint replacements and elective surgeries of other kinds and those are the things that are most profitable and the federal government stepped in and said, well, we’ll make up the losses for you. We’ll give you what turned out to be hundreds of billions of dollars to bail you out. But most of that money went to the hospitals that were losing their lucrative business and it was not the safety net hospitals that were losing most of the lucrative business. They were already not getting a lot of that money making stuff. So less of the federal bailout money went to them and at the same time they were the ones who were most inundated with COVID patients and serving the greatest needs.

Q: Right. did the hospitals that were serving significant numbers of COVID patients, did they get funding for that?

Himmelstein: They got some, but generally not up to what was actually needed to keep them fully solvent.

Q: Oh, okay. Have you heard of any hospitals going bankrupt or having financial issues because of the COVID influx of patients?

Himmelstein: You know, it’s hard to separate the COVID influx from other causes of hospital distress, but certainly there are hundreds of hospitals around the country that are in financial distress and much of it worsened during the COVID pandemic. I mean the other thing going on frankly was there was a shortage particularly of nurses and other frontline personnel and to make up for nurses who were out because they had COVID or resigned because they didn’t want to take care of patients in that situation. Hospitals turn to what’s called registries. So these are companies that sign up nurses and say we’ll get you a temporary assignment at a hospital, but at much higher daily pay than the hospitals normally pay their nurses, so many hospitals really suffered financially because in order to take care of patients they had to rent nurses essentially at a much higher price.

Q: Wow. That’s true. How are safety net and non-safety net hospitals funded differently?

Himmelstein: Well there are a number of funding streams that come to any hospital so the backbones of hospital financing are insurance programs. So Medicare patients account for a very large share of the patients who are at any hospital because the oldest pay people who tend to be the ones most in need of hospital care are mostly covered by Medicare. So Medicare is a big payer for hospital care. Private insurance generally pays the best so hospitals that attract more privately insured patients generally fare the best because a bigger share of their patients are privately insured bringing in the biggest payments. Medicaid often pays less, it depends, varies from state to state, but Medicaid generally pays less than Medicare and certainly less than private insurance.

So hospitals that care for a lot of Medicaid patients are getting paid less per patient than those that care for Medicare and much less per patient than those that care for privately insured. And finally the uninsured and whether hospitals get paid for them or not really depends on local circumstances. So in some cities, there’s some government funding that helps defray the costs of care for uninsured patients. In others it’s just the hospital that takes the loss and that really just varies from place to place.

Got it.

Himmelstein: So safety net hospitals are really the ones that care for the biggest share of Medicaid and uninsured patients and those are the patients who bring in the least money when hospitals care for them. And as a result those hospitals get less money on average per patient than those that are caring for mainly Medicare and especially privately insured patients. But the other thing is the way our f inancing system works, two other factors come into play. One is hospitals that have a powerful reputation or that control much of the market in their area when they negotiate with private insurers can get a much higher rate than weaker hospitals or hospitals where there’s huge amounts of competition. So just to give you an example, in Boston the biggest system there and the one with probably the best reputation is called Mass General Brigham. It’s the merger of Massachusetts General Hospital and the Brigham and Women’s Hospital, two well known Harvard hospitals, and they get paid about 20% more from private insurers than the safety net hospitals that have less market power have been able to negotiate. So even from private insurers, places like Cambridge Hospital, the public hospital where I worked for many years get paid something like 20% less than Massachusetts General Hospital does.

Interesting.

Himmelstein: And the other factor besides market power that plays in here is what’s the mix of services they’re doing. As I said earlier, hospitals get the most profit from doing elaborate surgeries and much less profit from caring for pneumonia or other kinds of routine illnesses and hospitals that do large volumes of that fancy stuff tend to be paid more. So all of those things factor into how much a hospital is getting paid, both by insurance and its payer. And I guess the last factor is for most patients there’s some out of pocket costs for co-payments and deductibles that they have to pay and if you have a lot of patients who are poor, you’re probably not going to get, be able to collect from those patients for the piece that they themselves would normally be responsible for.

Q: Right. So you may have already answered this question, but I’ll ask it. How does the funding source contribute or affect the financial stability of hospitals?

Himmelstein: Well, if you have more privately insured patients, you’re likely to be doing better. If you have more uninsured patients, you’re almost certain to be doing worse. And if you have more Medicaid patients, you’re more likely to be doing worse. And if you’re a big powerful hospital that’s able to negotiate from a strong position with insurers, you’re probably getting paid more. So all of those things, the sources of funding and your market power really contribute.

Q: Mm, right. And how does this affect patients and communities?

Himmelstein: Well the result is that hospitals that care for a lot of uninsured patients or patients covered by Medicaid are on average paid much less for their care than the richer hospitals – the hospitals caring for more privately insured and Medicare patients and what that means is that their buildings are not as nice because they can’t afford to upgrade them or build fancy new buildings. They may not be able to afford to upgrade their machinery and may not be able to afford the staffing levels that richer hospitals have. And that sorts pretty closely which hospitals are rich and which are poor with the kind of communities that they take care of. So hospitals that care for poor people, generally are poor hospitals and hospitals that care for rich people are generally rich hospitals. And that also goes along with the race and ethnicity of the patients. So hospitals that care for Black and Latinx patients generally are poorer hospitals and those that care for more White patients and White non-Hispanic patients are generally richer hospitals. So it’s a way of saying our payment system structures payment to incorporate racism and oppression of communities.

Thank you Dr. Himmelstein. Tune in next week when Dr. Himmelstein talks about how hospitals will get paid when everybody has Medicare for All.

Do you have a personal story you’d like to share about our wack healthcare system? Contact us through our website at heal-ca.org.

Don’t forget to subscribe to Code WACK! wherever you find your podcasts. You can also find us on ProgressiveVoices.com and on Nurse Talk Media.

Code WACK! is powered by HEAL California, uplifting the voices of those fighting for healthcare reform around the country. I’m Brenda Gazzar.

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March 1, 2023

Podcast host Joe Sparks marvels at the stubborn persistence of managed care in the U.S., which began in earnest with the HMO Act of 1973.

“We keep trying programs that assume for-profit intermediaries can save money and improve health outcomes,” he says, “even though 50 years of failure have shown that these programs don’t work.”

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