Sunday, December 19, 2004

Money Trumps Mission

The New York Times Magazine published an article about how not-for-profit hospitals charge indigent patients their highest rates, and then often aggressively pursue payment. The author, Jonathan Cohn from the New Republic, focused on the Advocate and resurrection not-for-profit, religiously affiliated hospital systems in the Chicago area. Cohn explained how hospitals negotiate with insurers by raising their "rack rates" for services, and then allowing larger discounts. However, uninsured patients are charged the artificially elevated "rack rates," even though most are uninsured because they are poor and can't afford insurance. Furthermore, after charging some of the poorest patients the highest rates, the hospital systems often pursue payment by using collection agencies, filing law-suits, and putting liens on property.
This seems to be another example of not-for-profit organizations abandoning their mission in pursuit of money. That these organizations are often lead now by businessmen who command huge salaries ($2.3 million in the case of Resurrection CEO Joseph Toomey) just underlines how far they have strayed.
Is this an inevitable consequence of the increased competitive pressure on hospitals? Cohn quoted Jacob Hacker from Yale, "We can't ask nonprofits to be more like for-profits in ways that we like - efficient, responsive, aggressive - without expecting that they will also become more like for-profits in the ways that we don't: rapacious, hardheaded, and, yes, sometimes selfish."
But are efficiency and compassion necessarily be opposed? Could better regulation, and better governance and different leadership of non-profits yield organizations that hold to their mission without being fiscally irresponsible? We won't know until these alternatives are thoroughly aired.

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