Healthcare Finance: A ?Hypocritic? Oath

Please excuse my absence from the ARM blog-scape; I was out of the office last week while attending a conference in Las Vegas.  But I wanted to revisit several recent healthcare finance stories that kept nagging at me even in the Nevada desert.

On April 4, The Wall Street Journal ran a major story on escalating profits at nonprofit hospitals.  InsideARM’s Cynthia Wilson also covered the developments from a receivables management perspective.

Some key statistics emerge from both articles that American consumers are likely to find astounding.

–More than 1500 U.S. nonprofit hospitals (77 percent) currently make a profit; only 61 percent of for-profit hospitals can say the same.

–Northwestern Memorial Hospital in Chicago has spent in excess of $1 billion dollars in the last decade to rebuild its facilities.  Some of those expenditures include marble lobbies, flat-screen TVs, and a 10,000 square foot rooftop garden.  Two years ago, Northwestern Memorial’s former CEO received a $16.4 million payout.

–In fiscal year 2006, the University of Pittsburgh Medical Center spent $10 million on advertising, $1 million in the New York Times alone.  UPMC’s CEO received more than $36,000 in 2006 for a car allowance, travel for his spouse, and personal advisory services.

–Beaumont Hospitals in Michigan paid almost $11,000 in country club fees for the president of its foundation in 2007.

–Sacred Heart Hospital in Chicago, a small for-profit in an economically disadvantaged neighborhood takes in 62 percent of its revenues from Medicaid.  Northwestern Memorial, five and a half miles away, must rely on Medicaid for only six percent of its revenues.

Did I say “astounding?”  To 47 million uninsured U.S. citizens, and to countless others struggling to make ends meet in the face of rising healthcare costs, “reprehensible” is perhaps more accurate.

To be sure, the impact of these statistics is magnified when divorced from the particular contexts from which they emerged.  But that fact is probably of little consolation to those weighed down by medical bills.  Scottish philosopher David Hume once said: “To hate, to love, to think, to feel, to see; all this is nothing but to perceive.”  In a year of economic strife, with healthcare reform at the forefront of many consumers’ minds, perception is all that matters.

And in an election year, a lot of those consumers will also be voters in November.  According to recent FEC filings, Senator Hillary Clinton may have a healthcare perception problem of her own.

At the end of March, Politico reported that Senator Clinton owed insurance companies nearly $300,000 in unpaid health premiums for her campaign staff.  Bills totaling $213,000 were more than 60 days past due to Aetna alone.  Healthcare is among the foremost pillars of Senator Clinton’s presidential campaign.

Disparity frequently exists between perception and reality.  But I would wager more hard cash than I’ve got in my pockets right now that a majority of Americans could find better “health-related uses” for $11,000 than greens fees at an exclusive Michigan golf club.  And I’ll “take the over” that when the typical healthcare consumer doesn’t pay her insurance premiums for two months running, her coverage will be terminated.  And the phone that rings at 3 A.M. (well, not literally 3 A.M… because that would violate the FDCPA) will be from a collection agency.