Nonprofit Hospitals are Sad


It turns out that the “the health law’s expansion of Medicaid in many states hasn’t benefited nonprofit hospitals in those states as expected, according to a new report by Moody’s Investors Service.” If you remember, the so-called nonprofit hospitals saw the ACA and Medicaid revenue as a gravy train.  But Medicaid doesn’t pay much, you say?  They pay more than zero and with the extraordinary charges hospitals give to other patients, the result should have given them a nice profit.  Oops.  We’re not supposed to say profit. Okay, the result is a nice raise for all the administrators.  But it didn’t.  Why?

The ACA resulted in a decrease of bad debt or unpaid bills but the deluge of the number of Medicaid patients offset that benefit because Medicaid doesn’t pay that much.  Get it?  No?  Well, as an example, one hospital system saved about $9 million in unpaid bills, but incurred around $28 million in costs for Medicaid patients, only about half of which was reimbursed by the state-run program.  Now these hospital administrators are sad.

Are we supposed to feel bad for the nonprofits?  They rallied to get Medicaid expansion knowing that there are not enough family doctors to take care of these patients.  They also know that Medicaid patients overutilize the system because they have NO skin in the game.  They pay no copays, receive no bills and get approved for almost any test/procedure they want or need.  And they love going to the ER.  You want to keep expanding Medicaid?  Then watch the system blow up.  These hospitals must have known that.  The ONLY thing they can do now is ask for more money from the state.  I have seen this before in Maine.  That means more taxes.

By the way, my favorite quote from this WSJ piece:

“We are not seeing the benefit of significantly decreased uninsured,” said Chris Howard, president of hospital operations at St. Louis-based SSM Health, a nonprofit chain. He said SSM’s operating margin increased in 2014, but “only as a result of extensive cost reductions” that included layoffs.

How many of you think these layoffs were administrators? How many think it was nurses?


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected]

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