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An Expert on Hospital Management Warns About the VA's Infrastructure Future

Alan Sager is Professor of Health Policy and Management at the Boston University School of Public Health. He recently spoke at VHPI's Zoom forum on the AIR Commission, which you can view here.

I've been tracking 1,200 hospitals in 52 cities since the 1930s. Our research documents that, overwhelmingly, medium-sized hospitals are more likely to close, than larger, richer hospitals that provide more expensive treatment. As a result, the American healthcare system provides care that is much more expensive than it had been and would have remained if the medium-sized hospitals had stayed open. Urban medium-size hospitals in the 52 cities were much more likely to close for several reasons. One is their reliance on doctors in private practice—doctors who are retiring, relocating, or dying more rapidly than they are being replaced. A second is their greater reliance on patients covered by Medicare and Medicaid—payers that pay substantially lower prices than private insurance companies. These hospitals find it hard to attract the disproportionately suburban privately-insured patients whose care is financed at much higher prices. All these problems are compounded for medium-size hospitals located in Black neighborhoods.

This has also created enormous geographic gaps in urban health care, what some people call “medical wastelands.” Consider the northern half of St. Louis, the eastern half of Washington, most of Detroit, and much of the New York City boroughs of Brooklyn and Queens. Similar problems have been growing in many rural parts of the nation.

The results of hospital closings are enormous. Thirty percent of the inpatients stop seeking care for years in the wake of a closing. That’s because it takes a long time to reweave a fabric of care. Black patients who rely on hospitals at twice the rate of whites to see a doctor are grossly harmed by closings.

Although, for decades, healthcare administrators and policy makers have argued that a closed hospital is a good hospital and that hospital closures will save, money, the data shows the opposite. The more hospitals we close, the more rapidly costs go up. The U.S. has many fewer beds per thousand than the average rich democracy. We also use hospital care at only four-fifths the rate of the typical rich democracy. And yet our healthcare spending is two-and-a-half times the rich democracy average. We spend more money to provide less care to fewer people than the other rich democracies of the world.

Hospital closings and downsizings are major policy failures in the United States. If policy experts keep failing and something doesn't work decade after decade, you'd figure they’d stop doing it. But for several reasons they don't.

One reason is that no one is accountable for healthcare delivery in the United States. Not for assuring financial access to care, not for training and sustaining primary care doctors for each American, not for adequate long-term or mental health care, not for affordable and safe meds, and certainly not for controlling costs.

I repeat. Nothing and no one is accountable. Except in the VA and in rare organized systems of care, like Geisinger in Pennsylvania or some of the Kaiser plans. Otherwise, accountability is close to zero. One reason is a belief that there is a functioning free market in health care. Now, I happen to like free markets. You may or may not. But I was also taught in my own religious tradition not to worship a golden calf. We don't have a functioning free market in health care. Not one of its requirements is satisfied or can be satisfied.

The VA is an accountable system. The rest of U.S. health care essentially is not. For example, only one state has a list of the hospitals and emergency rooms that are essential to protect the health of the public. Only one state. The rest don't want to know, because then they'd have to begin to be accountable.

A striking example: When a highly profitable hospital chain threatened to close Mercy Hospital on Chicago’s near-southside because it was losing money, the state of Illinois approved the sale of the hospital for $1.00 to a very small Michigan company that promised to sustain care at Mercy. But promises are nearly worthless without guarantees of capacity to perform. The sale of the hospital absolved Illinois politicians of the duty to find the money to sustain a needed but money-losing hospital.

Unaccountability afflicts more than hospitals; it is pervasive in U.S. health care. Just two examples: Almost one-fifth of in-network claims for care were denied by ACA marketplace insurance companies in 2019. Medicare Advantage plans over-bill Medicare by billions yearly by making their patients look sicker than they really are.

If you have a VA hospital that closes, there might be some VA physicians remaining, but how they coordinate with inpatient care becomes much more difficult. You’re going down a dangerous road. You start introducing into veterans' health care the same kind of chaos, unreliability and lack of accountability that pervades the rest of U.S. health care.

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