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Himmelstein and Himmelstein on capital investments and socioeconomic and racial inequities

June 18, 2020

Topics: Quote of the Day

By Gracie Himmelstein, M.A., Kathryn EW Himmelstein, M.S.Ed., M.D.
International Journal of Health Services, In Press (Posted June 18, 2020)


Racial inequities in health outcomes are widely acknowledged. This study seeks to determine whether hospitals serving people of color in the United States have lesser physical assets than other hospitals. With data on 4,476 Medicare-participating hospitals in the U.S., we defined those in the top decile of the share of Black and Hispanic Medicare inpatients, as “Black-serving” and “Hispanic-serving” respectively. Using 2017 Medicare cost reports and American Hospital Association data, we compared the capital assets (value of land, buildings and equipment), and the availability of capital-intensive services at these hospitals and other hospitals, adjusted for other hospital characteristics. Hospitals serving people of color had lower capital assets, e.g. $5,197/patient-day at Black-serving hospitals, $5,763 at Hispanic-serving hospitals, and $8,325 at other hospitals (p<.0001 for both comparisons). New asset purchases 2013-2017 averaged $1,242, $1,738, and $3,092/patient-day at Black-serving, Hispanic-serving and other hospitals respectively (p<.0001). In adjusted models, hospitals serving people of color had lower capital assets (-$215,121/bed, p<.0001) and recent purchases (-$83,608/bed, p<.0001). They were also less likely to offer 19 of 27 specific capital-intensive services. Our results show that hospitals that serve people of color are substantially poorer in assets than other hospitals, and suggest that equalizing investments in hospital facilities in the U.S. might attenuate racial inequities in care.

From the Discussion

The physical resources available for care at Black- and Hispanic-serving hospitals in the U.S. are sparse relative to other hospitals. The total value of plant and equipment per patient-day is about one-third less at hospitals serving people of color than other hospitals. Moreover, we found similarly large inequities in investment in new capital assets, which suggests that the gap in assets between hospitals serving people of color and other hospitals will persist, or even widen. Unsurprisingly in view of these large inequities, hospitals serving people of color are much less likely to offer many capital-intensive medical technologies and services.

What lies behind these differences? Until the Great Depression two main sources provided capital to build hospitals – federal, state, and local government funded the building of public hospitals, while private philanthropic donors funded the construction of private hospitals. The 1946 Hill-Burton Act (subsequently rolled into the Public Health Service Act) served to greatly expand the government’s role in hospital capital provision, offering grants and loans to build and modernize health care facilities. More recently, hospitals have funded most capital investments from their accumulated profits (which are called surpluses in non-profit hospitals), or from loans or bonds that must be paid back from future profits. For-profit hospitals can also raise capital from investors. In order to access any of these sources of capital, a hospital must be profitable or expect to garner profits in the future.

Several factors contribute to hospitals’ profitability, and hence access to capital. Payer mix, which is strongly linked to patients’ race, plays a key role. Hospitals have historically collected low payments for the care of uninsured and Medicaid patients (who are disproportionately Black and Latinx), while patients with private coverage are most lucrative. Furthermore, elective admissions are generally more profitable than emergencies, and non-white patients have a lower proportion of elective admissions than do white patients for a variety of conditions.

Although studies linking hospital capital investment and health outcomes are scant, and mostly dated, they suggest a positive relationship between investment in hospital capital and improved patient care. Thus, the gaps in capitalization that we found may contribute to ongoing racial inequities in the quality of hospital facilities, and thus health outcomes.

Hospitals’ capital investments “literally set in concrete the future physical configuration of the health care system”. The inequities we document reflect generations of deficient investment in the health care of communities of color. The term “structural racism” – the perpetuation of racial inequities by cultural, economic and political systems that are often inherited from the past and reproduced in the present – seems peculiarly apropos as a description of these stark inequities.

Gracie Himmelstein is an MD candidate at the Icahn School of Medicine at Mount Sinai, and a PhD candidate in Demography and Social Policy at the Office of Population Research at Princeton University. She received her MA in Demography from Princeton in 2019.

Kathryn EW Himmelstein is a resident physician in Internal Medicine at Massachusetts General Hospital. She received her MD degree from the Perelman School of Medicine at the University of Pennsylvania in 2018.



By Don McCanne, M.D.

At a time when our nation is especially concerned about racial inequities and their adverse consequences, this article is a particularly important contribution since it indicates that variation in capital investments in health care serving various socioeconomic and racial populations is a significant contributor to inequities in health care services and outcomes.

Those familiar with the Physicians’ Proposal drafted by PNHP – basically a single payer model of an improved Medicare for All – are aware that it is not only a proposal to finance the delivery of health care for all, but it also proposes separate budgeting of all major capital investments in health care, using regional health planning boards to allocate capital funds for new facilities and expensive new equipment based on medical need, project quality and efficiency. This would essentially eliminate the inequities in health care facilities that Himmelstein and Himmelstein have demonstrated in their research.

Following are excerpts from a separate press release:

Hospitals that care for large numbers of Black and Latinx patients have far less to spend on their facilities such as buildings and equipment, and offer fewer high-tech services than other U.S. hospitals, according to a new study of hospitals’ capital assets and spending. The peer-reviewed study, released ahead of print in the International Journal of Health Services, used data from 4,476 hospitals to determine the total value of each hospitals’ facilities.

Lead author, Gracie Himmelstein, an MD/PhD candidate at Icahn Mount Sinai Medical School and Princeton University’s Office of Population Studies, and a Woodrow Wilson Fellow at Princeton commented: “Our study confirmed the stark differences between rich hospitals and poor hospitals that I’ve seen during my training. Many of the doctors and nurses at poor hospitals are terrific, but they’re fighting an uphill battle; they care for the sickest patients in the most crowded and difficult conditions. To compensate for decades of unequal health financing we need to invest in hospitals serving Black and Latinx patients, and abandon an insurance system that offers hospitals rich rewards to care for some patients, and less or nothing to care for others.”

Co-author Dr. Kathryn Himmelstein, a resident in internal medicine at Massachusetts General Hospital and Harvard Medical School noted, “White Americans were living three and a half years longer than Black Americans even before COVID-19 began ravaging communities of color. If America wants to show that Black lives truly matter, we need to reverse the structural racism that’s literally built into our hospitals.”

Statement of conflict of interest:

Gracie and Kathryn Himmelstein are daughters of Steffie Woolhandler and David Himmelstein, co-founders of Physicians for a National Health Program and icons in the world of health policy research. Not only do the Himmelstein sisters have no conflict of interest inherent in this study, they passionately share with their parents a common interest in health care justice for all. For those of us near the end of our productive years dedicated to health reform advocacy, we can be heartened to know that the future is in good hands. America really will have health care justice for all, and, eventually, so will the world.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

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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