Virginia Hospitals: Doing Well by Going to the Well
April 2014
Virginia hospitals have been lobbying furiously for Medicaid expansion, pleading poverty and holding themselves out as poor, suffering angels of mercy. Without Medicaid expansion, “hospitals will close,” Governor Terry McAuliffe claims. (http://hamptonroads.com/2014/03/people-will-die-mcauliffe-says-medicaid-impasse) A completely different picture emerges when hospital finances are put under a microscope and viewed with a gimlet eye. They are doing quite well, thank you very much, completely demolishing their case for Medicaid expansion which, if to be justified at all, must now be placed on a completely different footing.
Virginia hospitals are heavily subsidized by government funds, starting with Medicare and Medicaid. Subsidized businesses have a special incentive to understate their economic success. Everything they claim must be viewed with skepticism because everything they say is politicized and self-interested. They are political animals that incur lobbying expenses and should be regarded as such.
This report is the product of extensive conversations with hospital industry experts, close examination of hospital tax filings, and an internal mailing the Inova hospital system in Northern Virginia sent to its employees.
Highlights -
Multi-million dollar salaries for administrators. First-class air travel. Why should taxpayers support the hospitals’ grandiosity or the Nordstromification of hospital perks and costs?
Did you know that hospitals give grant money to festivals and performing arts organizations? We should expand Medicaid just so hospitals can make more frivolous expenditures with public money?
A number of Virginia hospitals are fabulously profitable AFTER all charity care. Only a tiny fraction is in any real financial difficulty.
The Chamber of Commerce’s Medicaid expansion lobbying efforts have been bought and paid for. The Chamber has gotten grant money from at least one hospital organization. Everything the Chamber says about Medicaid expansion should be dismissed because the Chamber organization is financially self-interested in the growth of the Medicaid program.
Hospitals need a new business model, not the ill-fitting crutch of Medicaid expansion, if they are to thrive.
The hospitals stand to benefit from Medicaid expansion through patient reimbursements and state contracts for their managed care subsidiaries. Their lobbying is self-interest masquerading as concern for the poor. Very cynical - Machiavelli would be proud.
Bloated Cost Structure
Multi-million dollar salaries. Fat with middle managers. Too many mouths to feed, like home health care nurses who show up at your door uninvited after a minor operation. Atriums and palaces that are expensive to maintain. The latest and greatest equipment with no proof it improves outcomes. Lobbying expenses. Marketing. Advertising. First-class air travel. Cash grants for the arts and festivals. Money shoveled to the Chamber of Commerce. The Nordstromification of hospital costs and perks. Everything skewed to the high end when there’s no proof of added benefit. Major profits AFTER all charity care. Desperate pleas for more public money. Goosing employees to lobby for more public funding. There’s something wrong with this picture.
· Salaries - Let’s play a little game: How much money do you think a hospital administrator should make? $100,000 a year? $200,000? More than the doctors? Most Virginians would be surprised to learn that hospitals in this state pay multi-million dollar salaries to their executives, incur lobbying expenses, hire professional fundraisers, fly their employees first-class, and hand out grant money – all while demanding Medicaid expansion and more money from taxpayers. Tax Form 990 filings for 2011 reveal:
o Sentara Healthcare (Norfolk)
§ Gave CEO David Bernd total compensation of $4,581,410
· By comparison, CEO Delos Cosgrove of the Cleveland Clinic, which has a national reputation, was paid $2.4 million the same year.
o http://mediatrackers.org/ohio/2013/03/05/hospital-lobby-cannot-justify-medicaid-expansion
§ Gave 6 other people total compensation in excess of $1 million
§ Gave another 12 people total compensation between $500,000 and $1 million
§ Gave 4 more total compensation exceeding $300,000
o Inova Health Care Services
§ Paid president and principal officer J. Knox Singleton $3.4 million in total compensation.
§ Paid 6 more executives over $1 million
§ Paid 17 more over $500,000
§ Paid 5 more over $300,000
o Bon Secours Richmond Healthcare Foundation
§ Gave CEO Peter Bernard total compensation in excess of $1 million
§ Gave 6 other people total compensation in excess of $300,000
o The world has gone upside down. Hospital executives make more than the physicians. Pretty soon, kids will say they want to grow up to be hospital administrators instead of doctors.
· Compensation Surveys and Consultants – Inova Health System Foundation uses an outside compensation consultant, surveys and databases to ensure that salaries are ‘competitive’. This is the same practice that has sent corporate CEO pay into the stratosphere, drawing widespread criticism. Salaries have become unmoored from value and the economics of the business. Now they’re tethered to what the guy down the street makes. Compensation becomes an arms race fueled by ego and self-importance. And now hospital executives lobby for Medicaid expansion.
o There are better uses of public money than to stroke executive egos, don’t you think? Why should taxpayers help hospital executives line their own pockets? Why should we shovel more public money to hospitals when hospital executives are taking way more than their ‘fair share’?
· Gold-Plating – In addition to multi-million dollar salaries, the health systems give their executives housing allowances, first-class air travel, and generous expenditures for conferences (all numbers from 2011 Form 990s):
o Inova Health Care Services
§ $2,171,351 was paid for travel
· Inova has hospitals in Fairfax and Alexandria, suburbs in the Washington, D.C. metropolitan region. If Inova executives weren’t flying between Fairfax and Alexandria, where were they flying, and what hospital business were they conducting that required over $2 million in travel expenses?
§ $1,666,522 was paid for conferences
· Wasn’t the IRS recently criticized for lavish conference expenses?
§ $240,480 was paid for lobbying services
§ $2,405,468 was paid for advertising.
· If hospital services are so indispensable, why do they need to advertise at all?
o Inova Health System Foundation
§ Expenditures for food, travel, conferences and conventions
o Sentara
§ Paid for first-class airfare for employees, lobbying expenses, and professional fundraisers
· Grants – Did you know that hospitals give grant money to festivals and performing arts organizations? We should expand Medicaid just so hospitals can make more frivolous expenditures with public money?
o Sentara Healthcare
§ Handed out grant money to various organizations for, among other things, festivals, youth mentoring, endowments, and student career projects.
§ They also handed out money for indigent care to unrelated organizations when Virginia hospitals are demanding more money for indigent care for themselves. Sorry, but this doesn’t make any sense at all.
o Bon Secours Richmond Healthcare Foundation
§ Handed out grant money to a festival, performing arts organizations, the Special Olympics, and a Rotary club.
§ Also handed out grant money to the VA Chamber of Commerce and the Greater Richmond Chamber Foundation. WHAT IS THIS ABOUT? The Chamber of Commerce supports Medicaid expansion which would benefit hospitals, but is receiving grant money from at least one Virginia hospital organization.
· Incestuous Relationship with the Chamber - What we have here is an incestuous relationship between the Chamber and the hospitals where one hand washes the other. Add the chase for public money and government managed care contracts and you have all the ingredients for cronyism. The incestuous relationship goes beyond grant money. Hospital executives serve on the Chamber’s Board of Directors. According to the Virginia Chamber’s website, the Board of Directors includes:
o James W. Dunn
Vice President, Advocacy & Community Affairs
Bon Secours Virginia Health System
Richmond
o Mark S. Lawrence
Vice President of Governmental & External Affairs
Carilion Clinic
Roanoke
(formerly known as Carilion Health System, operates 8 hospitals)
o Jennifer Siciliano
Vice President, Government Affairs
Inova Health System
Falls Church
Anthem Blue Cross and Blue Shield
Richmond
REMEMBER THIS, IT WILL COME UP LATER
· http://www.vachamber.com/about-us/board-of-directors/
· Accounting Gimmicks – When examining claims of hospital profit and loss, one must navigate through deliberate obfuscation to get to the true picture.
o Hospitals often claim that they lose money on an operating basis. This may be true in some instances, but ignores non-operational revenue from all sources:
§ Contributions, bequests, and endowment investment returns
· In 2011, Inova Health System Foundation had total revenue of $170,819,205 (Form 990). It being a foundation, not one penny was from program service revenue. This was all investment returns. Total expenses were $19,840,983, meaning that this entity cleared over $150 million that year. However, the Foundation only gave out $5.3 million in grants to affiliated entities. This doesn’t make any sense. Hospital foundations exist to help their hospitals, but the Inova foundation kept the lion’s share of the money for itself. It reported $2.7 billion in assets that year, yet its hospitals are pressuring its employees to pummel the state for Medicaid expansion. Something doesn’t add up here. Why is Inova pushing so hard for expansion when it’s not hurting in the least and could easily turn to its own foundation for more cash?
§ Non-patient revenue from laundry, cafeteria, parking, labs, etc.
· In 2011, Inova Health Care Services took in over $4 million from Inova Reston MRI LLC, $5,673,199 from food services, and $5,161,884 from laundry services
o Another game that gets played is to count depreciation expense in the supposed operational loss. Such expenses, while sizeable, do not affect cash flow.
§ The Inova Health Care System Form 990 for 2011 reported $94,060,292 for depreciation.
o Inova claims it provided $120 million in charity care in 2012, but what is the real number? Hospital operations are notorious for inflating such numbers, padding them with bad debt from non-charity cases and, to a lesser extent, Medicaid and Medicare undercompensation (low reimbursements). Thus, the problem is grossly exaggerated. Passing off total uncompensated care as “charity care” is misrepresentation – by a factor of ten, according to the study cited below. Also, billing departments inflate the bills in the first place, floating suggested retail rates nobody pays (“charge basis accounting”). The listed sticker price for hospital services has been found to be, on average, three times true cost (and sometimes 14-100 times higher). When challenged, hospitals respond that charge basis prices are merely a starting point for negotiations. The people on the other side of the table in this public policy debate – legislators and taxpayers – should treat such prices with equal frivolity. How did Inova calculate its charity care number? Does it include bad debt? Medicaid expansion (private option or not) will do nothing to address hospital bad debt problems. Hospital billing is a Potemkin village. Why are hospitals lying about their charity care numbers? Isn’t there something wrong if they have to lie to make their case?
§ See http://www.thearkansasproject.com/wp-content/uploads/2014/02/Stacks-Report-021114.pdf
§ “Hospital list prices, which Medicare published last year, provide no indication about how much hospitals actually are compensated by private insurers.”
· http://capsules.kaiserhealthnews.org/index.php/2014/01/expensive-hospitals-strong-reputations-but-little-evidence-of-better-care-study-finds/
§ The Inova Health Care System Form 990 for 2011 indicated $57,752,398 in bad debt expense. The entity was still profitable by a wide margin
o The question is not whether a particular hospital can cover its costs. Maybe it can’t, but the real question is whether an efficient hospital could cover its costs with the same amount of revenue.
§ See http://www.medpac.gov/documents/Mar13_entirereport.pdf at p. xiv
Charity Care and Profitability
· Let’s cut to the bottom line: a number of Virginia hospitals are fabulously profitable AFTER all charity care. According to Delegate John O’Bannon, only a tiny fraction (6 out of 120?) are in any real financial difficulty. From the 2011 Form 990s:
o At Inova Health Care Services, total revenue exceeded total expenses by $135,587,492 AFTER charity care expenses ($72,969,958) scored at commercial insurance rates (Schedule H Part 5 notes)
o Augusta Health Care had total revenue of $276,925,796 and total expenses of $236,602,734. Thus, it cleared $40,323,062 AFTER all charity care expenses ($8,262,627)
o Sentara Healthcare reported total revenue of $189,083,040 and total expenses of $119,886,255 for a profit of $69,196,785. No charity or indigent care expenses appear anywhere on the 990.
· Similar results were found in Ohio where most members of the hospital lobby there would have been profitable even if they had not been compensated for charity care.
o http://mediatrackers.org/ohio/2013/03/11/ohio-hospitals-net-millions-without-charity-care-funding
· Delegate John O’Bannon looked at hospital 990 tax forms and found no immediate threat to the financial viability of Virginia’s safety net hospitals. VCU had a $171 million operating margin in 2013 and projects a $102 million margin this year. UVa had a $79 million margin.
o See the O’Bannon video at http://watchdog.org/126833/broken-medicaid-expansion/
§ Hospitals not in financial crisis
§ The state can help hospitals directly with inflation adjustments that were not in the introduced budget
o More on margins:
§ http://www.dailypress.com/news/politics/dp-nws-mcauliffe-chamber-0130-20140129,0,4397755,print.story
· “The 2013 Virginia Health Information report shows solid operating margins at a majority of hospitals. For example:
o Augusta Health in Fishersville, 23.28 percent.
o Martha Jefferson in Charlottesville, 10.57 percent.
o Rockingham Memorial Hospital in Harrisonburg, 7.69 percent.
o UVA Medical Center, 7.43 percent.”
§ http://watchdog.org/133055/virginia-hospitals-medicaid/
o http://www.timesdispatch.com/business/health/community-hospitals-on-front-line-of-medicaid-battle/article_51338dc8-3a96-556f-a306-7298f40f7742.html
o http://www.timesdispatch.com/business/health/vcu-health-system-to-add-south-hill-hospital/article_7c736b2e-be64-11e3-8451-001a4bcf6878.html
o Note that the House budget proposes additional money for free clinics and rural hospitals.
§ Per Del. Dave LaRock, the House budget includes $81 million in total funds to restore Medicaid inflation adjustments for hospitals
· Source: Virginians for Quality Healthcare (Feb. 24, 2014 mailing)
o According to the Foundation for Government Accountability, Florida sought a waiver to capture the savings from Medicaid reforms and put them to an all-purpose hospital fund to address financial stress at particular institutions. Virginia could do the same.
An Industry in Need of Restructuring
· Hospitals have a lot of problems that Medicaid expansion won’t solve. In fact, throwing more public money at hospitals will make some of these problems worse:
o the number of Americans killed by hospital errors is soaring
§ http://www.reuters.com/article/2014/03/27/us-hospitals-ratings-idUSBREA2Q0NC20140327
o Quality and malpractice problems abound
§ http://www.frithlawfirm.com/Articles/MedicalMalpracticeArticles/EmergencyRoomErrors/tabid/115/Default.aspxspx
§ http://www.frithlawfirm.com/Articles/MedicalMalpractice/Top5MistakesintheEmergencyRoom/tabid/169/Default.aspx
§ http://www.frithlawfirm.com/Articles/MedicalMalpracticeArticles/MedicationErrors/tabid/113/Default.aspx
o “A recent study found that up to 39 percent of health-care spending could be eliminated without harming consumers or reducing quality of care at hospitals.”
§ http://watchdog.org/133055/virginia-hospitals-medicaid/
o They are not angels. They engage in fraud: “Prosecutors said he accepted $28,000 in bribes from Michael D. Drobot, former owner of the now-closed Pacific Hospital of Long Beach, in exchange for supporting legislation that “delay or limit changes in California’s workers’ compensation laws relating to the amount of medical care providers are reimbursed for performing spinal surgeries.”
§ http://www.nbclosangeles.com/news/local/senator-ron-calderon-voluntary-leave-of-absence--248128381.html
o Right here in Virginia, in Fredericksburg, Mary Washington Hospital has been ordered to repay $327,180 for over-billing Medicare. Mary Washington’s problems run deep, scoring 32nd out of 39 in a quality survey, with the worst scores on infections and scanning. Its rates for readmission, heart failure and pneumonia are worse than the national average. It is facing new competition and is obviously having trouble adjusting to overcapacity in the market.
§ http://watchdog.org/134179/hospital-governor-medicaid/
o Large hospitals have higher prices than smaller hospitals. Large hospitals dominate their markets, which is why they can extract higher prices. Helping hospitals get larger is not the route to efficiency or ‘bending the cost curve down’.
§ See http://capsules.kaiserhealthnews.org/index.php/2014/01/expensive-hospitals-strong-reputations-but-little-evidence-of-better-care-study-finds/
· Senatara’s 2011 Form 990 states on p. 2 that its mission is partly to “promote the social, cultural, educational, and economic development of the community.” That’s a very strange mission for a hospital. Why should we subsidize their grandiose visions and mission creep?
o Undoubtedly, hospitals will raise the defense that their mission creep is federally mandated. Nonprofit tax-exempt 501(c)(3) hospitals must show “community benefit” and report their efforts on Form 990 Schedule H. Support for public health programs, community health centers, school clinics, and medical research qualify, but “community benefit” is an amorphous standard that also includes education, training, housing, economic development, community support, environmental improvements, leadership development, coalition building, community health improvement advocacy, and workforce development. Moreover, the standard also sweeps in “community building” activities that need only have the potential to improve community health. Such sprawl has cronyism and government support for ACORN-style left-wing political advocacy written all over it. Hospitals are supposed to get into housing and economic development? That’s nonsense. They are also supposed to spend money (derived from taxpayers and commandeered from private activity) on coalition building and the environment? It is foreseeable there will be abuses and voter registration drives tilted in favor of the Democratic party, just as has already happened with the Covered California Obamacare exchange. It’s time to stop growing this complex, time to stop government funding of the political Left, and say ‘Enough is enough!’ Otherwise, hospitals will become indistinguishable from other bureaucracies, unrecognizable mish-mashes of ‘Progressive’ causes that lose sight of their original mission to heal sick people. Now we know why the Left wants to keep growing hospitals. It’s because they want to change the definition of hospitals, capture them, and turn them into weapons to advance their aim of creating a permanent political majority for the Democrats.
§ Background: http://healthaffairs.org/blog/2014/02/11/encouraging-nonprofit-hospitals-to-invest-in-community-building-the-role-of-irs-safe-harbors/
· Come Back to Earth – The hospitals live in a bubble where they are insulated from the normal rules of economics. They’ve never heard of limits. The have an entitlement mentality. They feel entitled to endless streams of public money. They are stuck in the past and resisting inevitable and necessary change. In seeking Medicaid Explosion, they’re looking for an easy answer, instead of reworking their business model. They need to learn to live within their means like everyone else. Is it our job, or good public policy, to keep feeding the beast? Hospitals can cut costs without affecting patient care. Some have eliminated social workers, nutritionists, and other hangers-on not critical to the mission. Virginia’s hospitals, on the other hand, refuse to tackle their financial problems head-on, opting instead to lobby for Medicaid expansion aggressively so they can keep partying like it’s 1999.
· Hospitals are not the most efficient way to deliver many health services. It’s not our job to keep them on life support. They want to turn the clock back to a time when they were the only game in town. Now there are, for example, ambulatory surgery centers, stand-alone urgent care facilities, and independent imaging clinics that deliver services faster, better, and cheaper than hospitals. Hospitals need a new business model, not the ill-fitting crutch of Medicaid expansion, if they are to thrive.
o Procurement - What have Virginia hospital chains done to drive procurement savings? The industry supply chain is moving toward proprietary warehouses for greater efficiency.
§ “Now larger chains are building warehouses, automating them, ordering direct from the manufacturers, and eliminating the middle man markup. In UPMC’s case, they leased a 150,000 square foot warehouse, installed all the racking, hired new workers, installed a warehouse management system (WMS), and still were able to get a payback within six months based on moving the volume of approximately 10 vendors to self-distribution!”
· http://www.forbes.com/sites/stevebanker/2014/02/18/obamacare-transforms-the-hospital-supply-chain/
Cronyism
· The hospitals want Medicaid expansion. The hospitals give grants to the Chamber of Commerce. The Chamber of Commerce wants more grants, so it helps to lobby for Medicaid expansion. Hospital executives sit on the Chamber’s board of directors.
· Here is another clear indication of just how incestuous the hospital-industrial complex has become in Virginia: The state Secretary of Health and Human Resources William Hazel planned a French vacation with state Medicaid director Cindi Jones and Christopher Bailey, a senior vice president of the Virginia Hospital and Healthcare Association which lobbies for Medicaid expansion. The VHHA board of directors consists of executives from Inova, Bon Secours and other Virginia hospitals. The trip was called off after it came to light.
o http://www.timesdispatch.com/news/state-regional/government-politics/hospital-lobbyist-won-t-vacation-with-officials/article_e6ebe34a-0ad3-11e3-85fc-0019bb30f31a.html
· William Hazel has served as president of the INOVA Fair Oaks Hospital Medical Staff, and chair of the Medical Affairs council of the INOVA Health System.
o http://www.vahealthinnovation.org/who-we-are/board/secretary-william-a-hazel-jr-md/
o This raises the ugly prospect that Hazel could return to Inova at a multi-million dollar salary. Is that what his passion for Medicaid expansion really about and has the deal already been made?
· Hospitals are attracted to the Watkins/Hanger/Stosch “Marketplace Virginia” private option for Medicaid expansion because it fits with their goal to route more and more medical services through hospitals, even though hospitals are more expensive than independent medical providers. Hospitals are beginning to see insurance products from the Obamacare exchange where patients are surprised to learn that they have to go to a hospital for imaging and diagnostic testing. Independent imaging clinics can be a third cheaper than hospital imaging centers which charge “facility fees”. Marketplace Virginia would increase the number of people on nominally private insurance and thus the number of services performed through hospitals.
o "Patients seeking the most affordable imaging services should be aware that hospitals and their affiliated facilities are usually more expensive than freestanding outpatient centers. This is in part because hospitals are allowed to charge Medicare and most other commercial insurers a facility fee. It can cost up to 1/3 less to have an imaging exam at a freestanding imaging facility" http://www.radiologybusiness.com/topics/business/cost-comparison-hospital-based-versus-freestanding-outpatient-imaging-services
· The aims of the hospital-industrial complex reach beyond Medicaid expansion. Another aim is to shut off competition completely. Obamacare contains restrictions on doctor-owned hospitals which now cannot break ground on new facilities or expand existing ones without government approval. The requisite ‘certificates’ of need’ are controlled by … existing hospitals. Cartelization and the misuse of government policy to foreclose competition is a common aim of cronyism.
· Another data point is the fact that Anthem Blue Cross and Blue Shield has managed care contracts for Virginia’s Medicaid , FAMIS, and FAMIS Plus programs. Anthem’s HealthKeepers subsidiary has a webpage informing recipients how to enroll. Anthem HealthKeepers is the largest Medicaid managed care organization in Virginia, the only one with a statewide reach, with more than 250,000 enrollees. As noted above, an Anthem executive sits on the board of the Virginia Chamber of Commerce. Thus, we have a situation where the hospitals, the Chamber, and the managed care contractors are all lobbying for Medicaid expansion because it will benefit each of them and allow them to further benefit each other. It’s a very cozy arrangement, but only made possible by taxpayer dollars.
o http://www.anthem.com/wps/portal/ahpfooter?content_path=shared/va/f2/s1/t0/pw_ad094557.htm&state=va&label=Virginia%20Medicaid,%20FAMIS%20and%20FAMIS%20Plus%20Managed%20Care%20Programs.%20%20%20How%20you%20can%20enroll
o https://mss.anthem.com/va/pages/aboutus.aspx
o Anthem HealthKeepers is discussed in the DMAS Managed Care Resource Guide
April 2014 http://www.dmas.virginia.gov/Content_atchs/mc/mc-guideFV_p1.pdf
· The internal Inova email shows the hospitals’ angle in Medicaid expansion is not just about recouping indigent care expenses. Another motivation has to do with state managed care contracts. As stated in the email, “A Virginia solution would utilize our state’s already successful private-sector managed care organizations, such as Inova’s own InTotal Health.…”
Final Observations
· Enough material has been presented here to put to rest any notion that hospitals are poor, suffering angels of mercy in financial distress. ‘Big Healthcare’ is more like it, with multi-million dollar salaries and billion dollar endowments – special interests with their hand out, subsidy swamps who think the public should just keep throwing money at them no matter how outrageous their Nordstromification of hospital costs and perks gets. The hospitals’ case for Medicaid expansion – to relieve financial distress - does not stand up to the cold light of day.
· The hospitals have only themselves to blame for taking on subsidy risk. They grew and grew on public money, oblivious to the foreseeable consequence that they would one day face overcapacity issues while still saddled with a bloated cost structure. Their answer so far has been to rig the system to lock up business, to prevent competition from new entrants and more efficient delivery platforms. The bottom line is hospitals have to change. It doesn’t make sense to keep pouring money into buggy whip factories. Some hospitals have cut staff (http://www.usatoday.com/story/money/business/2013/10/13/hospital-job-cuts/2947929/), but the real answer is to formulate a new business model and, where it makes sense, to go out of business. Healthcare delivery needs to be rationalized instead of indulging executive high-end fantasies, reinforcing their cronyist connections, or holding back progress. Keeping hospitals on the same path they are currently on is not healthy. Moreover, their problems go way beyond anything Medicaid expansion can address. Big hospitals are not efficient, they charge higher prices, and are worse on important quality measures than smaller hospitals. We should not be helping them get larger through Medicaid expansion.
o Why should taxpayers fund further sprawl of the hospital-industrial complex? Ginning up the healthcare machine makes no more sense than ginning up the real estate machine did before the fiscal crisis of 2008.
· The internal email from Inova exhorted its employees to “work together towards a goal that not only benefits Inova, but benefits our friends and neighbors who need it most.” Did Inova tell its rank and file about its executives’ multi-million salaries? The $150 million in investment returns being held back by its foundation? The padded expenses for air travel and conferences? No. This is self-interest and self-indulgence masquerading as concern for the poor. Very cynical. Machiavelli would be proud.
April 2014
Virginia hospitals have been lobbying furiously for Medicaid expansion, pleading poverty and holding themselves out as poor, suffering angels of mercy. Without Medicaid expansion, “hospitals will close,” Governor Terry McAuliffe claims. (http://hamptonroads.com/2014/03/people-will-die-mcauliffe-says-medicaid-impasse) A completely different picture emerges when hospital finances are put under a microscope and viewed with a gimlet eye. They are doing quite well, thank you very much, completely demolishing their case for Medicaid expansion which, if to be justified at all, must now be placed on a completely different footing.
Virginia hospitals are heavily subsidized by government funds, starting with Medicare and Medicaid. Subsidized businesses have a special incentive to understate their economic success. Everything they claim must be viewed with skepticism because everything they say is politicized and self-interested. They are political animals that incur lobbying expenses and should be regarded as such.
This report is the product of extensive conversations with hospital industry experts, close examination of hospital tax filings, and an internal mailing the Inova hospital system in Northern Virginia sent to its employees.
Highlights -
Multi-million dollar salaries for administrators. First-class air travel. Why should taxpayers support the hospitals’ grandiosity or the Nordstromification of hospital perks and costs?
Did you know that hospitals give grant money to festivals and performing arts organizations? We should expand Medicaid just so hospitals can make more frivolous expenditures with public money?
A number of Virginia hospitals are fabulously profitable AFTER all charity care. Only a tiny fraction is in any real financial difficulty.
The Chamber of Commerce’s Medicaid expansion lobbying efforts have been bought and paid for. The Chamber has gotten grant money from at least one hospital organization. Everything the Chamber says about Medicaid expansion should be dismissed because the Chamber organization is financially self-interested in the growth of the Medicaid program.
Hospitals need a new business model, not the ill-fitting crutch of Medicaid expansion, if they are to thrive.
The hospitals stand to benefit from Medicaid expansion through patient reimbursements and state contracts for their managed care subsidiaries. Their lobbying is self-interest masquerading as concern for the poor. Very cynical - Machiavelli would be proud.
Bloated Cost Structure
Multi-million dollar salaries. Fat with middle managers. Too many mouths to feed, like home health care nurses who show up at your door uninvited after a minor operation. Atriums and palaces that are expensive to maintain. The latest and greatest equipment with no proof it improves outcomes. Lobbying expenses. Marketing. Advertising. First-class air travel. Cash grants for the arts and festivals. Money shoveled to the Chamber of Commerce. The Nordstromification of hospital costs and perks. Everything skewed to the high end when there’s no proof of added benefit. Major profits AFTER all charity care. Desperate pleas for more public money. Goosing employees to lobby for more public funding. There’s something wrong with this picture.
· Salaries - Let’s play a little game: How much money do you think a hospital administrator should make? $100,000 a year? $200,000? More than the doctors? Most Virginians would be surprised to learn that hospitals in this state pay multi-million dollar salaries to their executives, incur lobbying expenses, hire professional fundraisers, fly their employees first-class, and hand out grant money – all while demanding Medicaid expansion and more money from taxpayers. Tax Form 990 filings for 2011 reveal:
o Sentara Healthcare (Norfolk)
§ Gave CEO David Bernd total compensation of $4,581,410
· By comparison, CEO Delos Cosgrove of the Cleveland Clinic, which has a national reputation, was paid $2.4 million the same year.
o http://mediatrackers.org/ohio/2013/03/05/hospital-lobby-cannot-justify-medicaid-expansion
§ Gave 6 other people total compensation in excess of $1 million
§ Gave another 12 people total compensation between $500,000 and $1 million
§ Gave 4 more total compensation exceeding $300,000
o Inova Health Care Services
§ Paid president and principal officer J. Knox Singleton $3.4 million in total compensation.
§ Paid 6 more executives over $1 million
§ Paid 17 more over $500,000
§ Paid 5 more over $300,000
o Bon Secours Richmond Healthcare Foundation
§ Gave CEO Peter Bernard total compensation in excess of $1 million
§ Gave 6 other people total compensation in excess of $300,000
o The world has gone upside down. Hospital executives make more than the physicians. Pretty soon, kids will say they want to grow up to be hospital administrators instead of doctors.
· Compensation Surveys and Consultants – Inova Health System Foundation uses an outside compensation consultant, surveys and databases to ensure that salaries are ‘competitive’. This is the same practice that has sent corporate CEO pay into the stratosphere, drawing widespread criticism. Salaries have become unmoored from value and the economics of the business. Now they’re tethered to what the guy down the street makes. Compensation becomes an arms race fueled by ego and self-importance. And now hospital executives lobby for Medicaid expansion.
o There are better uses of public money than to stroke executive egos, don’t you think? Why should taxpayers help hospital executives line their own pockets? Why should we shovel more public money to hospitals when hospital executives are taking way more than their ‘fair share’?
· Gold-Plating – In addition to multi-million dollar salaries, the health systems give their executives housing allowances, first-class air travel, and generous expenditures for conferences (all numbers from 2011 Form 990s):
o Inova Health Care Services
§ $2,171,351 was paid for travel
· Inova has hospitals in Fairfax and Alexandria, suburbs in the Washington, D.C. metropolitan region. If Inova executives weren’t flying between Fairfax and Alexandria, where were they flying, and what hospital business were they conducting that required over $2 million in travel expenses?
§ $1,666,522 was paid for conferences
· Wasn’t the IRS recently criticized for lavish conference expenses?
§ $240,480 was paid for lobbying services
§ $2,405,468 was paid for advertising.
· If hospital services are so indispensable, why do they need to advertise at all?
o Inova Health System Foundation
§ Expenditures for food, travel, conferences and conventions
o Sentara
§ Paid for first-class airfare for employees, lobbying expenses, and professional fundraisers
· Grants – Did you know that hospitals give grant money to festivals and performing arts organizations? We should expand Medicaid just so hospitals can make more frivolous expenditures with public money?
o Sentara Healthcare
§ Handed out grant money to various organizations for, among other things, festivals, youth mentoring, endowments, and student career projects.
§ They also handed out money for indigent care to unrelated organizations when Virginia hospitals are demanding more money for indigent care for themselves. Sorry, but this doesn’t make any sense at all.
o Bon Secours Richmond Healthcare Foundation
§ Handed out grant money to a festival, performing arts organizations, the Special Olympics, and a Rotary club.
§ Also handed out grant money to the VA Chamber of Commerce and the Greater Richmond Chamber Foundation. WHAT IS THIS ABOUT? The Chamber of Commerce supports Medicaid expansion which would benefit hospitals, but is receiving grant money from at least one Virginia hospital organization.
· Incestuous Relationship with the Chamber - What we have here is an incestuous relationship between the Chamber and the hospitals where one hand washes the other. Add the chase for public money and government managed care contracts and you have all the ingredients for cronyism. The incestuous relationship goes beyond grant money. Hospital executives serve on the Chamber’s Board of Directors. According to the Virginia Chamber’s website, the Board of Directors includes:
o James W. Dunn
Vice President, Advocacy & Community Affairs
Bon Secours Virginia Health System
Richmond
o Mark S. Lawrence
Vice President of Governmental & External Affairs
Carilion Clinic
Roanoke
(formerly known as Carilion Health System, operates 8 hospitals)
o Jennifer Siciliano
Vice President, Government Affairs
Inova Health System
Falls Church
- Also, note that the Board of Directors includes:
- C. Burke King
Anthem Blue Cross and Blue Shield
Richmond
REMEMBER THIS, IT WILL COME UP LATER
· http://www.vachamber.com/about-us/board-of-directors/
· Accounting Gimmicks – When examining claims of hospital profit and loss, one must navigate through deliberate obfuscation to get to the true picture.
o Hospitals often claim that they lose money on an operating basis. This may be true in some instances, but ignores non-operational revenue from all sources:
§ Contributions, bequests, and endowment investment returns
· In 2011, Inova Health System Foundation had total revenue of $170,819,205 (Form 990). It being a foundation, not one penny was from program service revenue. This was all investment returns. Total expenses were $19,840,983, meaning that this entity cleared over $150 million that year. However, the Foundation only gave out $5.3 million in grants to affiliated entities. This doesn’t make any sense. Hospital foundations exist to help their hospitals, but the Inova foundation kept the lion’s share of the money for itself. It reported $2.7 billion in assets that year, yet its hospitals are pressuring its employees to pummel the state for Medicaid expansion. Something doesn’t add up here. Why is Inova pushing so hard for expansion when it’s not hurting in the least and could easily turn to its own foundation for more cash?
§ Non-patient revenue from laundry, cafeteria, parking, labs, etc.
· In 2011, Inova Health Care Services took in over $4 million from Inova Reston MRI LLC, $5,673,199 from food services, and $5,161,884 from laundry services
o Another game that gets played is to count depreciation expense in the supposed operational loss. Such expenses, while sizeable, do not affect cash flow.
§ The Inova Health Care System Form 990 for 2011 reported $94,060,292 for depreciation.
o Inova claims it provided $120 million in charity care in 2012, but what is the real number? Hospital operations are notorious for inflating such numbers, padding them with bad debt from non-charity cases and, to a lesser extent, Medicaid and Medicare undercompensation (low reimbursements). Thus, the problem is grossly exaggerated. Passing off total uncompensated care as “charity care” is misrepresentation – by a factor of ten, according to the study cited below. Also, billing departments inflate the bills in the first place, floating suggested retail rates nobody pays (“charge basis accounting”). The listed sticker price for hospital services has been found to be, on average, three times true cost (and sometimes 14-100 times higher). When challenged, hospitals respond that charge basis prices are merely a starting point for negotiations. The people on the other side of the table in this public policy debate – legislators and taxpayers – should treat such prices with equal frivolity. How did Inova calculate its charity care number? Does it include bad debt? Medicaid expansion (private option or not) will do nothing to address hospital bad debt problems. Hospital billing is a Potemkin village. Why are hospitals lying about their charity care numbers? Isn’t there something wrong if they have to lie to make their case?
§ See http://www.thearkansasproject.com/wp-content/uploads/2014/02/Stacks-Report-021114.pdf
§ “Hospital list prices, which Medicare published last year, provide no indication about how much hospitals actually are compensated by private insurers.”
· http://capsules.kaiserhealthnews.org/index.php/2014/01/expensive-hospitals-strong-reputations-but-little-evidence-of-better-care-study-finds/
§ The Inova Health Care System Form 990 for 2011 indicated $57,752,398 in bad debt expense. The entity was still profitable by a wide margin
o The question is not whether a particular hospital can cover its costs. Maybe it can’t, but the real question is whether an efficient hospital could cover its costs with the same amount of revenue.
§ See http://www.medpac.gov/documents/Mar13_entirereport.pdf at p. xiv
Charity Care and Profitability
· Let’s cut to the bottom line: a number of Virginia hospitals are fabulously profitable AFTER all charity care. According to Delegate John O’Bannon, only a tiny fraction (6 out of 120?) are in any real financial difficulty. From the 2011 Form 990s:
o At Inova Health Care Services, total revenue exceeded total expenses by $135,587,492 AFTER charity care expenses ($72,969,958) scored at commercial insurance rates (Schedule H Part 5 notes)
o Augusta Health Care had total revenue of $276,925,796 and total expenses of $236,602,734. Thus, it cleared $40,323,062 AFTER all charity care expenses ($8,262,627)
o Sentara Healthcare reported total revenue of $189,083,040 and total expenses of $119,886,255 for a profit of $69,196,785. No charity or indigent care expenses appear anywhere on the 990.
· Similar results were found in Ohio where most members of the hospital lobby there would have been profitable even if they had not been compensated for charity care.
o http://mediatrackers.org/ohio/2013/03/11/ohio-hospitals-net-millions-without-charity-care-funding
· Delegate John O’Bannon looked at hospital 990 tax forms and found no immediate threat to the financial viability of Virginia’s safety net hospitals. VCU had a $171 million operating margin in 2013 and projects a $102 million margin this year. UVa had a $79 million margin.
o See the O’Bannon video at http://watchdog.org/126833/broken-medicaid-expansion/
§ Hospitals not in financial crisis
§ The state can help hospitals directly with inflation adjustments that were not in the introduced budget
o More on margins:
§ http://www.dailypress.com/news/politics/dp-nws-mcauliffe-chamber-0130-20140129,0,4397755,print.story
· “The 2013 Virginia Health Information report shows solid operating margins at a majority of hospitals. For example:
o Augusta Health in Fishersville, 23.28 percent.
o Martha Jefferson in Charlottesville, 10.57 percent.
o Rockingham Memorial Hospital in Harrisonburg, 7.69 percent.
o UVA Medical Center, 7.43 percent.”
§ http://watchdog.org/133055/virginia-hospitals-medicaid/
- DSH cuts have just been put off, again, for another year and may never happen. It’s these cuts that supposedly justified Medicaid expansion. But DSH cuts are turning out to be another ‘doc fix’ and scheduled cuts will likely never take place.
- Medicaid Disproportionate Share Hospital (DSH) cuts were postponed to 2017 when the President signed the Sustainable Growth Rate (SGR) ‘doc fix’ bill on April 1, 2014.
- Text of final bill as passed by both houses:
- Reported:
o http://www.timesdispatch.com/business/health/community-hospitals-on-front-line-of-medicaid-battle/article_51338dc8-3a96-556f-a306-7298f40f7742.html
o http://www.timesdispatch.com/business/health/vcu-health-system-to-add-south-hill-hospital/article_7c736b2e-be64-11e3-8451-001a4bcf6878.html
o Note that the House budget proposes additional money for free clinics and rural hospitals.
§ Per Del. Dave LaRock, the House budget includes $81 million in total funds to restore Medicaid inflation adjustments for hospitals
· Source: Virginians for Quality Healthcare (Feb. 24, 2014 mailing)
o According to the Foundation for Government Accountability, Florida sought a waiver to capture the savings from Medicaid reforms and put them to an all-purpose hospital fund to address financial stress at particular institutions. Virginia could do the same.
An Industry in Need of Restructuring
· Hospitals have a lot of problems that Medicaid expansion won’t solve. In fact, throwing more public money at hospitals will make some of these problems worse:
o the number of Americans killed by hospital errors is soaring
§ http://www.reuters.com/article/2014/03/27/us-hospitals-ratings-idUSBREA2Q0NC20140327
o Quality and malpractice problems abound
§ http://www.frithlawfirm.com/Articles/MedicalMalpracticeArticles/EmergencyRoomErrors/tabid/115/Default.aspxspx
§ http://www.frithlawfirm.com/Articles/MedicalMalpractice/Top5MistakesintheEmergencyRoom/tabid/169/Default.aspx
§ http://www.frithlawfirm.com/Articles/MedicalMalpracticeArticles/MedicationErrors/tabid/113/Default.aspx
o “A recent study found that up to 39 percent of health-care spending could be eliminated without harming consumers or reducing quality of care at hospitals.”
§ http://watchdog.org/133055/virginia-hospitals-medicaid/
o They are not angels. They engage in fraud: “Prosecutors said he accepted $28,000 in bribes from Michael D. Drobot, former owner of the now-closed Pacific Hospital of Long Beach, in exchange for supporting legislation that “delay or limit changes in California’s workers’ compensation laws relating to the amount of medical care providers are reimbursed for performing spinal surgeries.”
§ http://www.nbclosangeles.com/news/local/senator-ron-calderon-voluntary-leave-of-absence--248128381.html
o Right here in Virginia, in Fredericksburg, Mary Washington Hospital has been ordered to repay $327,180 for over-billing Medicare. Mary Washington’s problems run deep, scoring 32nd out of 39 in a quality survey, with the worst scores on infections and scanning. Its rates for readmission, heart failure and pneumonia are worse than the national average. It is facing new competition and is obviously having trouble adjusting to overcapacity in the market.
§ http://watchdog.org/134179/hospital-governor-medicaid/
o Large hospitals have higher prices than smaller hospitals. Large hospitals dominate their markets, which is why they can extract higher prices. Helping hospitals get larger is not the route to efficiency or ‘bending the cost curve down’.
§ See http://capsules.kaiserhealthnews.org/index.php/2014/01/expensive-hospitals-strong-reputations-but-little-evidence-of-better-care-study-finds/
· Senatara’s 2011 Form 990 states on p. 2 that its mission is partly to “promote the social, cultural, educational, and economic development of the community.” That’s a very strange mission for a hospital. Why should we subsidize their grandiose visions and mission creep?
o Undoubtedly, hospitals will raise the defense that their mission creep is federally mandated. Nonprofit tax-exempt 501(c)(3) hospitals must show “community benefit” and report their efforts on Form 990 Schedule H. Support for public health programs, community health centers, school clinics, and medical research qualify, but “community benefit” is an amorphous standard that also includes education, training, housing, economic development, community support, environmental improvements, leadership development, coalition building, community health improvement advocacy, and workforce development. Moreover, the standard also sweeps in “community building” activities that need only have the potential to improve community health. Such sprawl has cronyism and government support for ACORN-style left-wing political advocacy written all over it. Hospitals are supposed to get into housing and economic development? That’s nonsense. They are also supposed to spend money (derived from taxpayers and commandeered from private activity) on coalition building and the environment? It is foreseeable there will be abuses and voter registration drives tilted in favor of the Democratic party, just as has already happened with the Covered California Obamacare exchange. It’s time to stop growing this complex, time to stop government funding of the political Left, and say ‘Enough is enough!’ Otherwise, hospitals will become indistinguishable from other bureaucracies, unrecognizable mish-mashes of ‘Progressive’ causes that lose sight of their original mission to heal sick people. Now we know why the Left wants to keep growing hospitals. It’s because they want to change the definition of hospitals, capture them, and turn them into weapons to advance their aim of creating a permanent political majority for the Democrats.
§ Background: http://healthaffairs.org/blog/2014/02/11/encouraging-nonprofit-hospitals-to-invest-in-community-building-the-role-of-irs-safe-harbors/
· Come Back to Earth – The hospitals live in a bubble where they are insulated from the normal rules of economics. They’ve never heard of limits. The have an entitlement mentality. They feel entitled to endless streams of public money. They are stuck in the past and resisting inevitable and necessary change. In seeking Medicaid Explosion, they’re looking for an easy answer, instead of reworking their business model. They need to learn to live within their means like everyone else. Is it our job, or good public policy, to keep feeding the beast? Hospitals can cut costs without affecting patient care. Some have eliminated social workers, nutritionists, and other hangers-on not critical to the mission. Virginia’s hospitals, on the other hand, refuse to tackle their financial problems head-on, opting instead to lobby for Medicaid expansion aggressively so they can keep partying like it’s 1999.
· Hospitals are not the most efficient way to deliver many health services. It’s not our job to keep them on life support. They want to turn the clock back to a time when they were the only game in town. Now there are, for example, ambulatory surgery centers, stand-alone urgent care facilities, and independent imaging clinics that deliver services faster, better, and cheaper than hospitals. Hospitals need a new business model, not the ill-fitting crutch of Medicaid expansion, if they are to thrive.
o Procurement - What have Virginia hospital chains done to drive procurement savings? The industry supply chain is moving toward proprietary warehouses for greater efficiency.
§ “Now larger chains are building warehouses, automating them, ordering direct from the manufacturers, and eliminating the middle man markup. In UPMC’s case, they leased a 150,000 square foot warehouse, installed all the racking, hired new workers, installed a warehouse management system (WMS), and still were able to get a payback within six months based on moving the volume of approximately 10 vendors to self-distribution!”
· http://www.forbes.com/sites/stevebanker/2014/02/18/obamacare-transforms-the-hospital-supply-chain/
Cronyism
· The hospitals want Medicaid expansion. The hospitals give grants to the Chamber of Commerce. The Chamber of Commerce wants more grants, so it helps to lobby for Medicaid expansion. Hospital executives sit on the Chamber’s board of directors.
· Here is another clear indication of just how incestuous the hospital-industrial complex has become in Virginia: The state Secretary of Health and Human Resources William Hazel planned a French vacation with state Medicaid director Cindi Jones and Christopher Bailey, a senior vice president of the Virginia Hospital and Healthcare Association which lobbies for Medicaid expansion. The VHHA board of directors consists of executives from Inova, Bon Secours and other Virginia hospitals. The trip was called off after it came to light.
o http://www.timesdispatch.com/news/state-regional/government-politics/hospital-lobbyist-won-t-vacation-with-officials/article_e6ebe34a-0ad3-11e3-85fc-0019bb30f31a.html
· William Hazel has served as president of the INOVA Fair Oaks Hospital Medical Staff, and chair of the Medical Affairs council of the INOVA Health System.
o http://www.vahealthinnovation.org/who-we-are/board/secretary-william-a-hazel-jr-md/
o This raises the ugly prospect that Hazel could return to Inova at a multi-million dollar salary. Is that what his passion for Medicaid expansion really about and has the deal already been made?
· Hospitals are attracted to the Watkins/Hanger/Stosch “Marketplace Virginia” private option for Medicaid expansion because it fits with their goal to route more and more medical services through hospitals, even though hospitals are more expensive than independent medical providers. Hospitals are beginning to see insurance products from the Obamacare exchange where patients are surprised to learn that they have to go to a hospital for imaging and diagnostic testing. Independent imaging clinics can be a third cheaper than hospital imaging centers which charge “facility fees”. Marketplace Virginia would increase the number of people on nominally private insurance and thus the number of services performed through hospitals.
o "Patients seeking the most affordable imaging services should be aware that hospitals and their affiliated facilities are usually more expensive than freestanding outpatient centers. This is in part because hospitals are allowed to charge Medicare and most other commercial insurers a facility fee. It can cost up to 1/3 less to have an imaging exam at a freestanding imaging facility" http://www.radiologybusiness.com/topics/business/cost-comparison-hospital-based-versus-freestanding-outpatient-imaging-services
· The aims of the hospital-industrial complex reach beyond Medicaid expansion. Another aim is to shut off competition completely. Obamacare contains restrictions on doctor-owned hospitals which now cannot break ground on new facilities or expand existing ones without government approval. The requisite ‘certificates’ of need’ are controlled by … existing hospitals. Cartelization and the misuse of government policy to foreclose competition is a common aim of cronyism.
· Another data point is the fact that Anthem Blue Cross and Blue Shield has managed care contracts for Virginia’s Medicaid , FAMIS, and FAMIS Plus programs. Anthem’s HealthKeepers subsidiary has a webpage informing recipients how to enroll. Anthem HealthKeepers is the largest Medicaid managed care organization in Virginia, the only one with a statewide reach, with more than 250,000 enrollees. As noted above, an Anthem executive sits on the board of the Virginia Chamber of Commerce. Thus, we have a situation where the hospitals, the Chamber, and the managed care contractors are all lobbying for Medicaid expansion because it will benefit each of them and allow them to further benefit each other. It’s a very cozy arrangement, but only made possible by taxpayer dollars.
o http://www.anthem.com/wps/portal/ahpfooter?content_path=shared/va/f2/s1/t0/pw_ad094557.htm&state=va&label=Virginia%20Medicaid,%20FAMIS%20and%20FAMIS%20Plus%20Managed%20Care%20Programs.%20%20%20How%20you%20can%20enroll
o https://mss.anthem.com/va/pages/aboutus.aspx
o Anthem HealthKeepers is discussed in the DMAS Managed Care Resource Guide
April 2014 http://www.dmas.virginia.gov/Content_atchs/mc/mc-guideFV_p1.pdf
· The internal Inova email shows the hospitals’ angle in Medicaid expansion is not just about recouping indigent care expenses. Another motivation has to do with state managed care contracts. As stated in the email, “A Virginia solution would utilize our state’s already successful private-sector managed care organizations, such as Inova’s own InTotal Health.…”
Final Observations
· Enough material has been presented here to put to rest any notion that hospitals are poor, suffering angels of mercy in financial distress. ‘Big Healthcare’ is more like it, with multi-million dollar salaries and billion dollar endowments – special interests with their hand out, subsidy swamps who think the public should just keep throwing money at them no matter how outrageous their Nordstromification of hospital costs and perks gets. The hospitals’ case for Medicaid expansion – to relieve financial distress - does not stand up to the cold light of day.
· The hospitals have only themselves to blame for taking on subsidy risk. They grew and grew on public money, oblivious to the foreseeable consequence that they would one day face overcapacity issues while still saddled with a bloated cost structure. Their answer so far has been to rig the system to lock up business, to prevent competition from new entrants and more efficient delivery platforms. The bottom line is hospitals have to change. It doesn’t make sense to keep pouring money into buggy whip factories. Some hospitals have cut staff (http://www.usatoday.com/story/money/business/2013/10/13/hospital-job-cuts/2947929/), but the real answer is to formulate a new business model and, where it makes sense, to go out of business. Healthcare delivery needs to be rationalized instead of indulging executive high-end fantasies, reinforcing their cronyist connections, or holding back progress. Keeping hospitals on the same path they are currently on is not healthy. Moreover, their problems go way beyond anything Medicaid expansion can address. Big hospitals are not efficient, they charge higher prices, and are worse on important quality measures than smaller hospitals. We should not be helping them get larger through Medicaid expansion.
o Why should taxpayers fund further sprawl of the hospital-industrial complex? Ginning up the healthcare machine makes no more sense than ginning up the real estate machine did before the fiscal crisis of 2008.
· The internal email from Inova exhorted its employees to “work together towards a goal that not only benefits Inova, but benefits our friends and neighbors who need it most.” Did Inova tell its rank and file about its executives’ multi-million salaries? The $150 million in investment returns being held back by its foundation? The padded expenses for air travel and conferences? No. This is self-interest and self-indulgence masquerading as concern for the poor. Very cynical. Machiavelli would be proud.