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Is it time to nationalize hospitals?

May 12, 2020

Topics: Quote of the Day

The fragmented US hospital system, made up of private and community hospitals, has made it harder to fight coronavirus.

By Daniel Skinner
Al Jazeera, May 11, 2020

The coronavirus pandemic arrived at a pivotal moment in the US healthcare, just as scrutiny over hospital pricing and practices was gaining traction, including at the Democratic presidential debates.

The crisis has provided a closer look at US hospitals, and has done so in multiple ways. We have seen the often dangerous work performed by committed healthcare professionals, but also the precarious conditions those professionals have been forced to work in.

Though a number of different proposals for overhauling the US healthcare have been put forward by liberals and progressives, it is curious that they fail to question our dependency on a fragmented collection of private hospitals that can hardly be said to be a system.

As Elizabeth Rosenthal has argued, Americans often criticise pharmaceutical and insurance companies without noticing that hospitals are in many ways a far bigger – and more expensive – problem. Among COVID-19’s lessons is that we need a national strategy for hospitals.

While Senator Bernie Sanders based his vision of “Medicare for All” on the Canadian system, where private hospitals contract with a government “single payer”, the UK approach, where the government owns most of the hospitals and employs the healthcare professionals working in them, may be what the US needs.

The high-profile hospitalisation for COVID-19 of Prime Minister Boris Johnson put UK hospitals in the international spotlight. Americans may be confused when they hear Johnson – a conservative politician – praise the National Health Service (NHS) as “unbeatable”. After all, Americans have been falsely told by their own conservative politicians that they should fear an NHS-like system.

We have not reached the point where a UK-style nationalisation of hospitals is being widely discussed but there are a number of reasons why it should be. Consider just three reasons among many.

First, COVID-19 illustrates the difficulties of coordinating US hospitals. As the virus spread, and realising the dangers that a fragmented system posed, New York state moved to coordinate its hospitals in such a way that Governor Andrew Cuomo could declare that: “We are one healthcare system.” Specifically, Cuomo established a process by which hospitals in parts of the state that had an excess supply of ventilators and personal protective equipment (PPE), but did not face a wave of coronavirus patients, would shift those resources to high-need areas.

But it was difficult to make this happen. Those who might say that such coordination is a logical response to a pandemic but not a preferable way to organise hospitals during normal times, are missing one of COVID-19’s lessons: namely, that we could vastly improve the general quality of care by better organising our hospitals.

Second, the need for politicians to assure Americans that patients’ medical bills for COVID-19 treatment will be “taken care of” illustrates not only the poor positioning of our system to handle health crises, but deep flaws in the approach itself.

One-off, disease-specific appropriations to cover patients’ expenses during a pandemic – while cancer and heart disease patients still risk bankruptcy – is poor health policy. This, of course, is a result of the larger, more protracted design flaws in US healthcare.

With millions of Americans lacking health insurance access at all, and millions more “underinsured” because of the out-of-pocket costs required by the plans they do have, Americans often go to hospital emergency rooms without knowing whether the bills they receive will be paid by insurance companies, or whether their treatment will end up costing them thousands – or even tens of thousands – of dollars.

As physician Adam Gaffney has eloquently argued, changes in how we finance hospitals might even remove the need for hospital payments altogether by re-envisioning them as truly public goods modelled on parks, public schools or libraries.

The American dependency on private hospitals limits the role the federal government can play in setting prices and putting in place a system of care that can be understood by patients.

While a federal law, known as the Emergency Medical Treatment and Active Labor Act, requires that most hospitals must care for patients to a point of stabilisation, what hospitals charge those patients for that care, the collection practices hospitals employ, and whether any follow-up care or even referrals are provided is as variable as the number of hospitals themselves.

This is unsustainable and dangerous, especially when one considers that the chaotic current landscape of US community includes 5,198 community hospitals, 2,937 (or 56.5 percent) of which are privately owned and not-for-profit, and 1,296 (25 percent) of which are “investor owned”, for-profit facilities.

An additional 965 community hospitals (18.5 percent) are owned and administered by state and local governments. And these community hospitals are to be distinguished from the current federal system of 209 non-speciality hospitals, which include facilities run by the US Department of Veterans Affairs and Indian Health Service.

Third, on the whole, market competition has made US hospitals worse, not better.

Ranking systems that distinguish “best” hospitals from others only serve to devalue other hospitals, especially those located in rural and other under-served areas. These hospitals cannot compete with their better-funded competitors, which creates a vicious cycle of negative perceptions and disinvestment that only further hurts rural and other hospitals serving as safety nets, especially in poorer US communities.

COVID-19, which has decimated many already-hurting US hospitals, is likely to leave struggling hospitals ripe for the picking by growing hospital systems, which continue to buy up smaller hospitals as part of an ever-growing plan of increased market domination.

While consolidation might at first glance appear to offer benefits for coordination during times of national crisis, the motives that drive these institutions are still not those of the national interest. One post-COVID-19 project should be understanding the effects of consolidation, and the role of large systems, within the pandemic response.

As progressives are quick to note, Democrats have gone out of their way to save the current system from itself. For political reasons, ranging from inadequate congressional support for larger reform to a desire to minimise disruption for patients, the architects of the Affordable Care Act were not able to address the structural flaws in US healthcare. The best they could do, working under political constraints in place in 2009, was to extend the existing system – from Medicaid to private insurance – to populations that typically fell through the cracks. While the Affordable Care Act brought healthcare access to millions of Americans, and is believed to have saved thousands of lives, it only postponed the need to restructure the system itself.

To be sure, there is political wisdom in leaving US hospitals as they are. Justified or not, many Americans hold generally positive views of their local hospitals. Even more politically problematic is the fact that organisations such as the American Hospital Association have formidable lobbying operations that keep legislators from acting. The motivations of these organisations in resisting the nationalisation and even increased oversight of hospitals are rooted in maintaining the financial incentives that drive that system, not in the best interests of patients or populations.

Considering how unpopular for-profit health insurance companies are, consigning them to the dustbin of history is clearly less politically charged than a major rethinking of hospitals. But this does not mean that we should accept the status quo.

A national commission should be tasked with understanding why US hospitals were so poorly equipped to handle the pandemic. A key piece of this story is likely to be equity. While certain hospitals have fared well, many have not, but the reasons for the differences are not always clear. We are only beginning to make sense of the failures that led to equipment shortages and capacity problems.

An inquiry should also assess differences in how the US’s for-profit and non-profit hospitals have fared, with an eye towards whether the non-profit hospitals served their local communities in a way that warrants the generous tax exemptions they receive.

If Democrats and Republicans – and the pressure groups that inform them – wish to keep the nationalisation of US hospitals off the bargaining table, Congress will need to address these issues, and more.

COVID-19 has exposed the vulnerability of American hospitals. Rethinking them must be one of the pandemic’s enduring legacies.

Daniel Skinner is Associate Professor of Health Policy at Ohio University’s Heritage College of Osteopathic Medicine.



By Don McCanne, M.D.

The combination of a health crisis plus an economic crisis that has disrupted the lives of everyone of us certainly lays fertile ground for reassessing our health care system and its financing. Already much has been written about how we would have been better off if we already had in place the popular single payer model of an improved Medicare that included everyone – a publicly administered and taxpayer financed social insurance program.

As long as our attention is already directed to revising our health care financing system, it seems appropriate to give more thought to another very successful model of single payer reform – a national health system in which the facilities are owned by the government and the health care professionals are employees of the government.

In this article, health policy professor Daniel Skinner calls on us to rethink the role that the fragmentation of the U.S. hospital system played in the often less than stellar performance in response to the COVID-19 pandemic.

We should give thought to issues such as the differences in the mission of a public or non-profit hospital that is dedicated to patient service versus an investor-owned hospital that has a mission to maximize returns for the investors. We should consider the rationale of a response to the pandemic that is based on a single disease when we must also ensure that the system can effectively meet the needs of patients with a multitude of other disorders that also require medical attention.

The PNHP model of single payer Medicare for All would convert for-profit hospitals to non-profit status. Is that enough? Just as many of our non-profit private insurers have adopted the egregious policies of the investor-owned insurers, would conversion of for-profit hospitals to non-profit status provide enough incentive to place patient service well above a common business ethic? But then, with government ownership and management, there can be a tendency for conservatives and austerity-minded moderates to underfund health programs that may result in impaired capacity or inadequate public health preparedness as we have seen during this pandemic. The increasing dominance of neoliberal politicians is thrusting more austerity upon us.

At any rate, it is clear that we need to dump the private insurers and establish our own universal social insurance program – a single payer improved Medicare for All. Should we also nationalize the hospitals, creating a system of socialized medicine, or should we merely convert the for-profit hospitals to non-profit status? Merely having that conversation may ease the fears of those who are worried that Medicare for All would be a move too far to the left when the alternative under consideration would be a shift all the way to socialized medicine. For some of us that would be fine, but single payer Medicare for All is not a bad position of compromise.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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