By Bruce Carruthers, Vietnam Veteran and VHPI Steering Committee Member
In the recent book These Are the Plunderers: How Private Equity Runs – and Wrecks – America, authors Gretchen Morgenson and Joshua Rosner detail how corporate control of an increasingly large swath of the U.S. healthcare system has turned it into a for-profit industry that jeopardizes patients’ health and lives.
The book is replete with illustrations of how corporations have adversely impacted patients in their quest for profits. In 2021, for instance, a bipartisan Medicare Payment Advisory Committee in Congress found that private-equity firms who purchased healthcare organizations enhance profits by increasing charges, cutting staff, and replacing higher-cost physicians with lower-cost personnel, such as physician assistants. They also increased revenue by having their healthcare entities do business with other companies they own, such as medical supply companies and administrative and debt-collection agencies — whether or not these companies were the most efficient and cost effective.
Another example of how private-equity firms inappropriately, and possibly illegally, increase profits occurs when they takeover nursing homes. Corporate-controlled firms changed how they billed Medicare for rehabilitation services by reassigning patients to the highest cost rehabilitation service. This was not because their conditions had changed, but only to increase a firm’s profitability. In some cases, these shifts increased costs from as low as 8.4% to as high 93.3%.
Emergency room care also changes dramatically when private-equity firms take them over. By 2020, private equity firms controlled a whopping 40 percent of ERs. The book notes that, to circumvent state laws preventing corporations from practicing medicine, private-equity firms “operate under professional associations that appear to be owned or run by medical doctors but are in fact overseen and controlled by a corporation.” To increase profit, they hire less experienced medical staff and increase patient loads. They also order unnecessary hospital admissions. These admissions enhance profits because, as the authors note, Medicare “pays at least three times more for inpatient admissions than it does for care billed as observation or emergency room visits.”
Also in 2020, nurses at facilities owned by the private equity-backed Hospital Corporation of America (HCA), accused the company of violating workplace standards and failing to notify workers when they were exposed to Covid-19. Over this same year, HCA posted earnings of $3.75 billion, up from $3.5 billion in 2019.
Late last year, North Carolina Attorney General Josh Stein filed a lawsuit against HCA for its alleged failure to maintain critical services for the citizens of his state. The lawsuit details HCA’s many failures, including staffing shortages, inadequate emergency room care, and a lack of cancer care. Stein’s office has received over 500 complaints about HCAsince it took over the primary regional healthcare entity in Western North Carolina.
Despite laws in roughly 30 states prohibiting corporations from practicing medicine, few state attorneys have moved to sanction bad actors. On the rare occasion they do, the authors note that the monetary penalties have amounted to “a slap on the wrist, not a real rebuke.” For example, in a 2015 New York case, a company that generated $645 million in revenues settled for a paltry $450,000.
As these and other examples illustrate, profits, rather than patients, are often the only concern of the corporations increasingly running our hospitals, physician practice groups, and nursing homes. Although proponents of our market-driven system insist for-profit companies provide higher quality care at a lower cost, the U.S. now spends over 18.3% of its gross domestic product on healthcare, up from 13 percent in 2000. This is twice as much as other industrialized countries spend. Yet, according to a recent Commonwealth Fund study, the U.S, ranks lowest of all industrialized countries on 71 critical measures that cross five domains including access to care, care processes, administrative efficiency, equity, and healthcare outcomes.
Given these facts, why is Congress in a rush to push veterans into this broken system through the Veterans Community Care Program (VCCP), created by the MISSON Act?
Nearly half of the care available at VA facilities is now provided in the private sector, with many veterans referred to private providers who work for corporate-dominated or private-equity firms. Given this, it is hardly surprising that from FY 2017 to FY 2021, VA spending on community care rose from $10.1 billion to $21.8 billion – a 116% increase that does not factor in the costs of administering the program. At the same time, VA spending on healthcare in its own facilities grew by only 32%. This is despite numerous studies that VA care is equal to and often superior to private sector care. (A list and summary of these studies can be found here.)
Not only is this misguided rush a grave and potentially dangerous disservice to American veterans, it threatens to destroy the only truly integrated healthcare system in the nation. The VA provides veteran-centric, holistic healthcare. Its providers have acquired great expertise in issues specific to military service. Instead of the fragmented care that characterizes the private sector, Veterans Health Administration (VHA) providers are motivated solely by patient needs. They are under no pressure to order unnecessary tests, to admit patients to drive up revenues, and increase workloads to generate profit. Besides world-class patient care, VHA has a powerhouse research program, is integral to training the country’s healthcare professionals, and, in its mission of national preparedness, is a backup to the nation’s private healthcare system in emergencies.
Congress needs to immediately halt outsourcing VHA care and reject bills like two recently proposed by Senators Jon Tester (D, MT) and Jerry Moran (R, KS), respectively named the Veterans Health Act and the Making Community Care Work for Veterans Act.
Both bills will further accelerate the privatization of VA healthcare and line the pockets of corporate executives. Congress should also conduct a careful review of the cost and quality of care veterans are receiving through the VCCP. A recent article by VHPI Senior Policy Analyst Russell Lemle spells out in compelling detail why we need such a review. To continue the kind of outsourcing that puts veteran in the hands of those more concerned with profit than patient care makes all the talk about honoring veterans no more than hollow rhetoric.