Today’s hot stock: healthcare. Other market bubbles have burst. Remember the trajectory of real estate? But healthcare? Maybe not. This bubble might continue to soar.
As with other bubbles, the money pours in. “Healthcare” has segued from the nonprofit model of 60 years ago into the capitalized market of today. Nursing homes, physician practices, hospitals, hospices … all are market-driven, with investors, including hedge-funds, eager to claim a share. Even the facilities once upon a time under the aegis of a venerable nonprofit, often a religious body, have come under the for-profit umbrella. The “sisters” have joined with Wall Street. Hospices, started as a cadre of volunteers, have kept the name “hospice” while they morph into the “product” of a larger venture. That is no surprise: there is money to be made from the dying, as well as the sick.
Consider a few statistics. The United States will spend a projected $4.7 trillion — or 18% of the national economy — on healthcare in 2023 - the highest in the world. Hospital expenditures grew 2.2% to $1,355.0 billion. Spending for services provided at freestanding nursing care facilities and continuing care retirement communities in 2022: $191.3 billion. Pharmacy benefit managers — the intermediaries between the manufacturers, wholesalers, insurers, and pharmacies, was a $498.47 billion industry in 2022 — an industry that has blocked regulations to lower the costs of drugs. So long as the population grows, and ages, the demographics promise steady growth.
Where does the money go? It is not making us healthier.
The money is being squeezed up, to reward the financial wizards behind this mega-system. CEO salaries of insurance honchos have soared. The three highest-paid executives run Molina Healthcare (total compensation last year $22.1 million, with a CEO to average worker pay ratio of 278:1; CVS Health (total compensation last year $21.3 million, CEO pay ratio 380:1, and CIGNA ($20.0 million, ratio 277:1). Executives at nonprofit hospitals earn respectably high salaries, often seven figures, and physicians take home six-figure salaries; but the real money lies with the money-manipulators.
Those financial wunderkinds have a mission: profits. Organizations buy practices, hospitals, hospices, et al, to “streamline” them to wring more profits. The notion of making an organization more efficient is not arcane. It entails cutting and downgrading staff. Hospitals will have fewer nurses per patient, nursing homes fewer aides per patient. It entails substituting less-expensive nurse practitioners for physicians, aides for registered nurses. The term is no longer “your doctor,” but “your healthcare provider,” as though the provider is a vendor selling cars. It entails ratcheting back benefits, marked by the court battle over Obamacare’s provision of “free” preventive care.
Insurers know that if they can put the cost of preventive care onto patients (who will probably defer, or refuse that care), they will pay out less. The more an insurer can “limit” a “limited formulary,” the greater the profits. Ditto for restricted networks. The federal government is analyzing the Medicare Advantage plans, overseen by private insurers: not surprisingly, those plans deliver lower benefits than “traditional” Medicare policies overseen by Uncle Sam. Finally, the wunderkinds can simply raise the costs to us, the premium-holders, and patients — another way to bolster profits.
Sometimes streamlining will hurt patients. CVS just paid a $1.5 million fine to the state of Ohio for “understaffing” at its pharmacies, leading to 27 “safety cases. Hospitals that understaff risk the “near miss” errors that may precipitate patient-disasters. To families who think that “understaffing” harmed a patient, law firms promise litigation.
The government could fight the corporate zeal to understaff, both in numbers of personnel and expertise. Currently, nursing homes have low levels of required staffing. In Texas, for instance, the facility ratio for every 24-hour period is one licensed nursing staff person for each 20 residents or a minimum of four licensed-care hours per resident day. In Michigan the afternoon shift must have one staff for every 12 residents. Yet when the government has sought to require more staff, the facilities have not bolstered salaries, but argued for exemptions: “We can’t fill the slots.”
The wizards who produce the computer I write on, the car I drive, the nifty appliances strewn around my house have earned their reward. So have the scientists behind the wonder-drugs. Those producers add “value.” As for the hedge fund investors, perhaps their funds fuel the fledgling companies. Perhaps they merit millions. They do bear a risk after all: the bubble in non fungible tokens and cryptocurrency did not continue to soar.
The Big Money masterminds behind corporate health care, though, see “our bodies, our minds” as just another profit-center. We serve them; they don’t serve us.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email joan.retsinas@gmail.com.
From The Progressive Populist, April 15, 2024
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