Valley View Hospital and High Health Costs

“Don’t take me to the hospital. If we are in a car wreck, take me to the vet,” my hostess informed me. Health care in that not-too-distant tropical paradise has a dreadful reputation.

Americans are overjoyed to be free of that problem. Faith in the quality of US health care is as strong as a Texas tent revival. People look at the industry with wide-eyed, open-mouthed awe.

So much so that health care is asking for blank checks, and getting them. The cost averages $25,000 per US family per year. A trade publication puts local ObamaCare costs among the very highest in the nation1.

US health care is twice as expensive as many other rich countries, and four times more than the best managed system. However, public health is not better.

Done right, US health care costs could be cut 50% without fudging quality. Each family could have an extra $12,500 in its bank account every year. That is life altering money.

Health Care is Too Expensive

That is plenty of money for local housing, plenty to send kids to higher quality schools, plenty to get that troubled cousin into a substance abuse program, plenty to send twenty Guatemalan kids to school, plenty to build a great retirement foundation for every local family.

Dr. Frankenstein would like the US health care system: nonprofit arms, for-profit legs, a variety of government organs, a befuddled bureaucratic brain; all topped by a faintly flickering halo.

For negotiating however, the system could hardly be harder on patients. The jargon, the insurance, the emergencies, the lack of upfront pricing, the subsidies, the mysterious invoicing, all strap the patient to a gurney for a thorough fundosuction.

Master journalist Stephen Brill asked the CEO of a major health insurance company to explain a statement-of-benefits his company had mailed to Brill. The CEO confessed that it baffled even him.

Ugh. The most basic communication between buyer and seller, in the largest industry of the most advanced economy in the world fails to do its job. Some patients suspect the defect is intentional.

NonProfit Hospitals Have Sharp Elbows

They have good reason. Prices are painfully high. Hospitals have huge revenues. Valley View Hospital reported $192 million of cash-in-the-door in 20142. In contrast, Garfield County budgeted for revenues of $101 million that year3.

Valley View was sitting on a dragon’s hoard of cash and securities piled $144 million high. That’s enough to send every family in Garfield County a check for $6,3004.

Nonprofit hospitals are aggressive businesses. Valley View reported $22 million in profit in 2014. That is more money than 15 Major League Baseball teams listed by Forbes.5

Hospitals are among the largest employers with the best paid execs in most communities.

Valley View Hospital Association had six people earning more than $650,000 annually in 20146.

They are all fine, productive, upstanding human beings, I am sure. They cannot be blamed for accepting generous paychecks any more than TV’s Oprah or baseball’s Zack Greinke.

Yet hospitals across the nation are spinning monster profits and lotto sized paychecks. Among hospitals, the nonprofits are more profitable than for-profits, according to Brill. Something basic is out of whack.

At most nonprofits hospitals, charity is only a PR exercise. Donations into Valley View Hospital were less than 1/2 of 1% of revenue7 in 2014. It reported charity given out by the hospital at 3.5% of revenue8.

This raises another intriguing feature (or bug) of nonprofits. Unlike governments, they are not owned by citizens. Unlike normal businesses, they are not owned by shareholders. Nor are they owned by their donors or beneficiaries.

Nonprofits are eerie beings…almost paranormal corporations. No one can claim possession. Like dogs in Boulder.

Non-profit bosses have more power over their organizations than the ordinary corporate titan. He might as well dress in tights and a cape, with “Super Corp” stamped across his chest and fly through the air, smashing all obstacles in his organization’s path to greater glory.

Hospital Can Benefit Community More

Instead, he could use his special powers to fight for truth, justice and the American way.

Here’s how: Give away that cash stash. Yup. All $144 million. Give it to a research organization dedicated to finding as many ways to cut health care costs as possible, no holds barred. No politickin’, just research.

Dig up little ways, big ways, look for new ways, all the ways, as many ways as possible. Shoot to cut society’s health care costs in half. Without compromising quality. Fast.

Politicians will not do it. Patients do not have incentive to do it. Insurance companies and employers have too little market power to do it. Providers have too much market clout to want do it. Brill thinks that Medicare is doing it. Let us find out what will do it.

Seek the highest payback for the people from which the money was wrested. Build the organization in the valley. Emancipate it from the hospital.

As a nonprofit, the hospital has a higher purpose than itself. It can give birth to an even greater good.

 

A version of this story was published in the Glenwood Post Independent newspaper on 17 May 2016.

 

1 http://khn.org/news/most-expensive-insurance-markets-obamacare/

22014 Valley View Hospital Association IRS 990, Part I, Ln 12, pdf pg 1

3http://www.garfield-county.com/finance/documents/2014-adopted-budget/budget-overview.pdf

4Garfield County pop of 57,000. Avg HH size est at 2.5 people, nat’l avg

6VVHA 2015 IRS 990

72014 VVHA IRS 990, Line 8 divided by line 12 = 0.45%

82014 IRS 990, pdf pg 30, Line 7k, column (f), $6.8 million.

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