In the Post-COVID Era, We Will See “Experts” Blame the Victim

We’ve written a lot recently about COVID-19’s impact on hospitals, especially financial impacts, and the completely inadequate and even confrontational approach many health plans have taken during this unprecedented crisis. In the coming months, hospitals are going to struggle to rebuild elective surgical volume – the source of nearly all their profit – as they simultaneously prepare for a possible resurgence of COVID-19 in late fall and winter. Meanwhile, they struggle with liquidity as many health plans conduct business as usual and sit on much-needed cash.

Then I read this article in Washington Post, which includes the title, “We’re short on hospital beds because Washington let too many hospitals merge.” Authored by two researchers, the article posits that consolidation has “driven up insurer costs,” which means “more cash for already-wealthy hospital conglomerates and the executives who run them.”

There are so many things wrong with this article; it’s hard to know where to start. Yet we have to understand that it’s being read by inside-the-Beltway regulators, lawmakers, and their staff, and it may influence their opinions. What a tragedy that would be.

Blaming consolidation on hospitals is sort of like blaming robbery on the victim. The article ignores the concentration of power in the healthcare system with health plans over the last 20 years. Hospital consolidation has accelerated in recent years because smaller hospitals face financial instability and even bankruptcy as a result of uber-aggressive health plans and the ridiculously low rates they pay. These same health plans have cut rates, installed absurd administrative requirements, and made it nearly impossible for independent physicians, surgery centers, and small hospitals to remain independent. The smaller organizations, in turn, have sought the “safety of the herd” by joining larger organizations with stronger balance sheets. 

If you want to find the source of consolidation, look no further than the health plan industry. And if you want to find the antagonist in the American health care system – those managing to grow market share, profitability, and stock price at the expense of American consumers, business owners, and the very healthcare system they’re supposed to support – then look no further than the BHUCA (Blues, Humana, United, Cigna, and Aetna) plans.

Right now, American hospitals need our genuine help, not armchair quarterbacking from out-of-touch researchers and academics trying to score points at their expense. Hospitals have been under pressure for years to reduce costs and operate more efficiently – that’s why there are under a million hospital beds in America. Maybe if the billions of dollars that flow to health plans – 18% of every premium dollar – were available for care instead of outrageous rules and administrative waste, we would all be better off.

It’s time to stand up for the hospitals who saved us, no criticize them for the survival steps they’ve taken in the face of tremendous pressure from health plans.



April 20, 2020
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