Right on the heels of my piece concerning Americans overpaying for their health care, I was shocked, and not a little exasperated, about the announcement of Northwell Health’s fund drive. (Northwell launches $1 billion fundraising campaign, Nov. 8).
Either I have gone mad, or the public loves being a patsy. I’ve watched as Northwell Health has gobbled up hospital after hospital, and when it ran out of takeover targets on Long Island, it, as its ads say, “looked North.” There’s a reason behind this asset grab.
A National Bureau of Economic Research study found that health care costs are 15 percent higher in areas with hospital consolidation. So do well over a dozen other studies that have been conducted nationwide over the years, so it’s hardly an isolated phenomenon.
What triggered this national movement to consolidation? There is enormous pushback on the costs of health care in this country, and the provider networks, along with their aligned physician groups, have banded together to stop the assault on their margins.
Establishing a monopoly is the most effective way of doing this. Which proves, once again, that once any semblance of ordinary market constraints are introduced into health care, the industry builds a moat to prevent any erosion of income. Big Pharma acts no differently.
The article quotes the chair of the Board of Trustees, “Like most nonprofits, we operate on incredibly thin margins and we don’t use our revenue to pay shareholders.”
Well, yeah. They use it to pay for everything else, and set their own prices, payroll and practices. The hospital also leverages its 501(c)3 status for a whole host of advantages, like tax free borrowing for many hundreds of millions of dollars’ worth of bonding, floated through the Dormitory Authority of New York state, which is normally used for the benefit of state colleges.
It also runs a sizable investment portfolio, which has invested hundreds of millions in dollars overseas, so it can generate more income for itself, which again, is tax free. Revenue hovers around $10 billion, and they are openly proud of the mere $200 million they gave in uncompensated care.
I presume part of this could merely be in uncollectible accounts. It’s the largest private employer in New York state, but it has every advantage of a public utility with none of the oversight or fiscal constraints.
The chain blew $3 million on naming rights to Jones Beach Theatre, an odd use of assets, considering there’s no place else to go. And it seems the $70 million loss it took on its ill-fated attempt at an insurance monopoly called “Care Connect” was simply blamed on a “flawed risk adjustment program for the Affordable Care Act,” which few other insurers faced. Far be it from them to blame their own management.
The announcement states, “Funds raised from the campaign will be invested in innovation within the company as well as Northwell’s philanthropic efforts in local communities, according to Northwell.”
As I mentioned in an earlier piece on these “Walks For Cures,” once again, prospective patients will donate their own money to pay for delivery of their own cures, and then the patients will pay again to have themselves treated by the methods they funded. And you can see how far their philanthropic efforts go relative to their revenue.
Even so, I have to inform readers that in a normal society, patient revenue generated by a hospital isn’t supposed to be redistributed for philanthropic efforts. In most modern societies, everyone is simply… treated. That’s the difference between a society founded on justice, instead of the conceit of charity.
And here we are, with Northwell asking for $1 billion in alms. I don’t know which is more dystopian: the fact that Northwell operates in the manner it does, or the public’s contentment that this is the way things are supposed to be. It’s a good thing for Northwell that all Long Islanders all share one common trait: an enormous tolerance for pain.
Donald Davret
Searingtown
