More of what is wrong with the hospital system…

Deal falls through with the purchase of a string of hospitals.

The hospital in question relies mostly on charity care — it’s also a sanctuary town.

A group of investors wanted to buy several Catholic hospitals. The investors wanted a smaller hospital to partner with a much larger hospital about 4 miles from there; the larger hospital turned the suggestion down.

The group of investors that is backing the deal owns Dave and Busters, the Carribean Burger King chain and a chain of drug stores. In total they own about 3 dozen businesses — and none of them entail owning and operating a hospital.

This is already a bad deal — you know zero about the health care industry. Just based on that it won’t be a success.

Factor in most of the clients that are admitted to that hospital are non paying clients — the state has been pumping aid into this hospital for years.  The 39M of debt that they have is guaranteed by the state.

There is a weeks’ worth of money on hand — and there is also the pension program that is short on money.

Last year, a group of investors bought a hospital. When the buyers breezed in with their bags of money a year ago, they promised the moon; they were going to upgrade the facility and add many many more beds to the current facility. They guaranteed that there would be many more births at the hospital and they said they’d have a prosperous and florishing oncology program in place.

None of it happened. They too have about a week’s worth of money and paychecks have already bounced.

Add many more beds???

We already have a surplus of hospital beds in this state — 20 years ago, the state recomended the closure of about a dozen hospitals — and one of them that was suggested for closing is the hospital in the link I posted.

Investors that buy out hospitals? Not a good idea.  I can’t see how it will benefit the client. And if you know nothing about owning and operating a hospital, I don’t suggest you find out you know squat about buying and operating a hospital by actually going through with the purchase.

And how are you going to turn a profit when your clients are not actively making a purchase out of their own pocket?? Nearly every hospital in this area is getting by on charity care. We’re stretched to the thinnest — you will not turn a profit if all you have coming in is a handout from the state.

I wonder if the potential buyers of that string of hospitals know anything about New Jersey or the demographics of each town that the hospitals are in. I wonder how much of a feasibility study was conducted at all?

Private investors purchasing a hospital?

How does it benefit the client??

I can’t see how this will benefit the client. I predict it will come to nothing but a bad end.

7 thoughts on “More of what is wrong with the hospital system…”

  1. The only way that buying hospitals makes sense is if you don’t take insurance, require people to pay up front and have the demographics that will support that kind of business model. Maybe you turn the hospital into a combination bariatric medicine (Stomach stapling/lap bands) and plastic surgery facility.

    It is fairly common for a group of doctors to go into practice together. We see this all the time. An unfortunate aspect of “Obamacare” is that it limits the ability of doctors to own hospitals.

    It drives me crazy that there is no transparency in medical costs. The doctors and hospitals know what they will bill, so why can’t I know? It would give “doctor shopping” a whole new meaning.

  2. If I’m not mistaken there are a few for profit hospitals not far from me but for the most part they are non profit. I also don’t think these type of hospitals work unless you are in a wealthy area and have services that would be wanted, like spacious maternity rooms and things like that.

    Here’s my problem with hospitals and that is how those with insurance and those who can pay are overcharged for those who can’t. Don’t get me wrong, I have no issues with paying more so someone on hard times can get cancer care for example. However the problem that is happening in Illinois is that we are paying more for the illegals, those having multiple kids on welfare, etc. Not to mention the people who did it to themselves like in most cases obesity. There’s also the problem of charging people for things they neither want nor need. I remember when I was in the hospital when I was 13 for headaches (they suspected a tumor but turned out to be an allergy) they forced me to take a pregnancy test, which they overcharged. My mom couldn’t understand why they forced this, but it was procedure. I can’t remember all the tests but some were unrelated to me but still charged.

  3. That same hospital — the second one I mentioned — had a bariatric surgery/ bariatric health division when it first opened 36 years ago. It was only moderately successful and it cost a good chunk of money for its services.

    The entire board of directors and the CEO needs to be replaced when a facility screws up financially up and does so royally.

    What is needed to run a facility: top medical people who know how to manage and budget a dollar and know what works and what does not.

    This same bunch of investors promises to upgrade the facilities and buildings with over 250M of cash. Not going to happen — these hospitals are community hospitals and the facilities are in plain ole neighborhoods. Somebody will wind up losing their home in the name of greed and expansion; who needs that?

    No sense in building more beds; as I said, hospitals in our area are closing. And there still is considered a surplus of beds. It makes no sense at all to just plop down X number of beds — another hospital tried exactly that: built a fancy high end addition onto the hospital; the space was dedicated to OB/GYN — it was a Build it and They Will Come philosophy.

    It never happened. They never got the medical staff and they never got the patient demographic they were after. That hospital is now closed; it went out of business 4 years ago (it will be reopned for urgent care only and be a 100 bed facility)

  4. One reason that there are too many hospital beds is that many surgical procedures that used to require a week or so in the hospital are now done on an outpatient basis. This would include hernia repair, gall bladder removal, and intervention for kidney stones, just to name a few. Similarly, maternity wards have been pushing women out the next day unless they have a Caesarean for decades. Were I investing in patient care, I’d invest in clinics like that.

    Procedures are where you make your money, not on the hospital beds. If you’re going to make money on a service, you need to minimize your fixed costs, and if you can’t do that, to increase the number of services that the facility renders.

    Cost-shifting to pay for indigent/charity care has to end. A first step is to repeal EMTALA, the Emergency Medical Treatment and Active Labor Act, which guarantees that people will be treated when injured or in labor even if they can’t pay for it. This is a big source of cost shifting, because many uninsured cannot pay for the care that they receive and the doctors and hospitals have to write it off. If I have to pay extra for charity care, something that I don’t think that I should have to do, I want a tax CREDIT, not just a deduction, for the extra charge at both the state and federal levels. because every dollar that I pay for indigent care is a dollar that state or federal government doesn’t have to pay. An advantage of universal coverage is that everyone is charged the same, but that is more expensive to do than many people want to pay.

    Health insurance obtained through our employers is more expensive than we think. I pay about $1300 a year for my policy, but the actual cost is about $6500, and this is for coverage for only one person. The cost for a family would be roughly $15,000.

  5. Sure, I’ll agree that a lot of it is sign of the times — outpatient surgeries where the doc sends the excised specimen to a reference lab. No longer is it sent to pathology where the doc has admitting prilvledges.

    Here is where a pathologist is a dying occupation (no pun intended). Where you’d find 3 or maybe 4 pathologists in a 250 bed hospital? Thing of the past. Now it’s perhaps one and a “Spare” part time pathologist for coverage when the head pathologist is not there.

    Which also means less laboratory personnel.

    Such a laugh…a couple weeks ago, our local daily’s job section featured med techs as a field to be in. Said the average salary was about 50 grand. Really. On what planet?

    But when you have the majority of clients who cannot afford insurance or willingly will NOT buy insurance (the Koreans do not believe in health insurance; they pay out of pocket for procedures; more on this in a bit) that’s where the problem lies.

    Hospitals will never reap a big profit, like a non-hospital organization.

    The Koreans will not buy health insurance; it’s a cultural thing. One hospital has taken advantage of this; they have taiored their hospital to cater to that group — translators, offering services and food and other amnenities to accomodate and attract Koreans…who show up with big suitcases of money to pay in advance for an admission and surgery.

    …and we all know that uninsured patients are charged the most so who really is this benefitting??? They are being charged at least twice the amount — and in this day of non itemized bills how do they determine the rates for the services???

  6. Madness is correct about the outpatient system. In 2005 I had knee surgery and my dad had it done in 2007. In the past I would have been in the hospital for weeks, but now both me and my dad had it done in the morning and were home a few hours later. I recuperated in my bed for a few weeks instead of a hospital bed.

  7. There are dozens of procedures that are now outpatient procedures — and there are also many many outpatient surgery centers. Lots of them are located outside the premises of a hospital.

    The entire system needs an overhaul. Overhaul to what, I don’t know but hospitals are still interested in being acute care facilities.

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