In my last piece, I made these points:
1) Obamacare banned new physician-owned hospitals (POHs) and limited the ability of existing POHs to expand.
2) POHs, while at least equal in the quality of care provided by hospitals not run by physicians, were better at saving Medicare dollars (aka, taxpayer money) to the tune of $1.1 billion per year.
3) The top dogs at the biggest non-profit hospitals haul in salaries as high as $33 million per year.
4) The nonprofit hospitals have a decades-long history of plowing money into political campaigns to make sure the pols maintain the status quo.
Even so, these big hospitals routinely “cry poor.”
Did you know that hospitals can (and do) charge Medicare patients more for the very same treatment they would receive in an independent doctor’s office?
That’s because the amount paid by Medicare is permitted to vary, depending on the site where the treatment is provided. Payments are not “site-neutral,” i.e., not the same no matter where the treatment is provided.
According to some estimates, making payments “site-neutral” would save as much as $150 billion over a decade.
Lack of site neutrality incentivizes nonprofit hospitals to buy the practices of independent physicians, eliminating competition that could provide medical services at lower cost.
Year by year, less expensive outlets for medical services disappear by being absorbed into the world of the big, tax-exempt “nonprofits.” The no-profit hospital then benefits from the increased customer traffic that pays its way with higher Medicare dollars.
But wait, there’s more!
Hospitals collect revenue in the form of “facility fees.” The total amount is unknown, but it’s thought to be hundreds of billions of dollars per year.
Would you be surprised to learn that POHs tend to have lower overall facility fees than hospitals not owned by physicians?
But wait. There’s more!
Nonprofit hospitals generate revenue from another source — their financial relationships with their Group Purchasing Organizations (GPOs).
GPOs are middlemen that negotiate contracts for supplies and medications to sell to hospitals, nursing homes, and other facilities.
GPOs don’t manufacture anything. They do not even distribute supplies.
They merely write the contracts.
And they’re allowed by law to receive kickbacks from manufacturers. (The polite term is “rebates.”)
Obviously, a GPO can favor a manufacturer who’s willing to pay the highest kickback… excuse me, “rebate.”
Kickbacks drive up the cost of supplies. For example, a metal surgical screw that costs $1 online can cost $800 under a contract between a hospital and GPO. No wonder hospital bills are so high.
Does the patient benefit from having the best product available? Maybe. Maybe not.
You may be inclined to think that an agency of the federal government would oversee the effects of having provided a “safe harbor” for kickbacks, which are generally illegal in American business. On paper, that’s the job of the Office of Inspector General (OIG) in the Department of Health and Human Services (HHS). That office is supposed to see that the kickba — I’m sorry, rebates — are properly accounted for and reach their intended beneficiaries.
Here’s the problem. The top lobbyist for the GPOs’ industry association revealed in 2018 that since the “safe harbor” permitting these “rebates” was created in 1987, no one from the federal government has requested a look at the books. That’s over 30 years of abdicated responsibility to the taxpayer.
But wait. There’s more!
GPOs “share” a portion of their earnings with the hospitals that sign contracts with them. Consider it a “kickback from the kickback,” a “share back,” if you will.
According to one student of the subject writing in Healthcare Matters, “many hospital executives… [have] learned to rely on that share back as an integral part of their annual compensation.”
Surely, somebody in the federal bureaucracy makes sure that “share backs” are reported accurately. Turns out that this oversight is the job of the Center for Medicare and Medicaid Services (CMS).
Here’s the problem. The Government Accountability Office (GAO) reports that CMS hardly ever checks on the matter.
But wait. There’s more!
And it’s every bit as squalid and conflicted as what’s been described above.
When Dr. G. Keith Smith, founder of the Oklahoma Surgery Center, testified before the Senate in Washington last month, he revealed under oath that when he was not in charge of his own hospital, he struggled to get the quality of supplies he desired for his patients. But now that he operates a POH, he’s free of the nonsense perpetrated by the “nonprofits” and the GPOs.
You can wait until the cows come home for the HHS-OIG and CMS to do their jobs.
In the meantime, insist that your lawmakers prod those inside HHS and CMS who have been charged with oversight to get cracking, while the lawmakers themselves enact legislation to achieve: 1) Price transparency and real competition, 2) an end to Obamacare’s stupid provisions on POHs, and 3) “site-neutrality” in payment of Medicare (taxpayer) dollars — the same payment for the same services, no matter where the services are provided.
Let’s end this outrageous waste of money we pay to support a corrupt, conflicted, and perversely incentivized political-healthcare-corporate complex.
Marion Mass, M.D., is a practicing pediatrician in Bucks County, a leading member of the Free2Care movement, and a member of The Independence‘s advisory board.
Reprinted with permission from The Independence by Marion Mass, M.D.
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
Government waste is everywhere. Elon as head of DOGE exposed it and what did the progressives do. Try to destroy this businessman by floating lies Elon is getting rich off the fraud he finds.. Oh my God he will know our Social Security numbers we can’t have that. Let’s burn up a few Tesla dealerships. Private owners of Teslas were also affected. Everywhere where Tesla were parked they ended up being burned or damaged to the tune of millions of dollars. That they were doing it to their own fellow citizens DIDNT appear to them. All Tesla owners are MAGA therefore they are evil. And here we find more fraud and largesse. The people working for all these agencies earn top dollars from the director on down. Even low-key peons are making half a million or more in salary. And we the recipients of Medicare pay more in premium every year than the COLA. And the non profit hospitals are getting richer and richer. Insurance companies are getting richer. The people are paying more and more but the benefits go down more and more. Why is it that the government created programs and there never is oversight attached to it. You know when you work for the government fraud and grift is the first thing that happens in any program they set up. Elon found it every where only the progressives send out protesters and their propaganda media made sure the people heard the lies over and over again. Trump is going to take away your Medicare and Social Security. Let’s investigate first. Overhaul the regs and put in more oversight. You will see the cost of medical insurance and Medicare will go down. Big Pharma and big Non profit hospitals need to be taken down a peg. 33 million dollar salary to run a non profit hispital is just a bit much. That is why the Affordable Care Act is affordable for these institutions not for the average American poor or middle class. They mandate to take ACA or fine you. And then they tax us again with tax money to pay the premiums. Sweet ride isn’t it? Wake up America. You are being taken to the cleaners by these progressives to destroy your country, including you.
Interesting article. I have done my best to stay away from hospitals overall. I don’t use my city hospital because they are $$$$$ driven and a ripoff. There is a hospital in a nearby city that offers better care at a reasonable price. This article shows another aspect of the fraud that is going on.
We know who has oversight, so have AMAC start a write-in campaign to contact the following:
CMS – Dr. Oz
HHS – Robert Kennedy
OIG – Juliet T. Hodgkins
And why wasn’t this covered during DOGE, which ends July 2026.
In August of 2024, my husband and I both had to get rabies shots after being bitten by bats. My husband’s bill was covered by the VA. I just got a statement from the insurance company that my treatments were denied due to ” incorrect verbage.” The treatment in 2024 was almost $28,000.00 for 7 shots- total amount of shots now given for rabies.
Thanks to AMAC for making all of us aware of this organization. I believe they are doing the right thing.
I was raised in a medical family; my father was an M.D. (Surgeon) and my mother was a nurse. My father was100% dedicated to his profession and lived to prolong both the Hippocratic Oath and the sanctity of the patient/doctor relationship. He had a PRIVATE PRACTICE for over 40 years.
Thanks, Amac. I just had a blood test for 8 – 10 parameters at a local heart doctor’s office which is located in a hospital. Charge – $2,500 if insurance; $560self pay. I have never seen a blood work bill from a lab that high. We used to have a couple of private labs in town. When I searched for a private lab this time, nothing within 50 miles… I wonder what happened?
How incredibly sad that the people we elect to represent us, to basically protect us, are the very ones responsible for us being ripped off by the Healthcare Industry, Big Pharma and a former President of the United States. Since that former President is the author of the ACA, it is he who should be held accountable along with all of those Senators and Congress Members who voted to pass the ACA, starting with Pelosi who said they had to pass the bill approving ACA in order to know what was in the stinking Bill.
And while prodding those lawmakers to get busy add in the long-needed update to the pay charts. What medicare pays is no where near what it costs.
Anything the government runs non-profit or not almost invites the people who run these operations to steal money from us. It is time that the medical profession is run totally by a private business who is doing it for profit. It is the only way the medical field is going to stop stealing from we, the taxpayers. If they screw up, they lose money if they handle their business like their lives depend on it (which they do) they will make money. The post office just posted a 3 billion (it I remember correctly) dollar loss! That needs to be given to a private company as well. The people running these “non-profits” and the government personnel who steal from our government are killing our economy and the middle class.
I am glad someone is reporting the corruption in the massive hospital growth around the massive metropolitan areas while the rural hospitals are either closing or being absorbed by the corporate hospitals. The major media won’t report these things.
To avoid all hospitals: try to stay healthy even into your old age. Avoid processed foods as much as possible for starters…
First, I would like to say that I have been a member of AMAC for 10+ years. I have valued their insights on many issues, and often share them with family and friends. However, I take issue with this article, as there are many holes, and lack of key specifics. I worked in healthcare for 22 years (finance), and our system as a whole was either the 3rd or 4th largest Catholic health system in the country. This was a nonprofit system.
I wholeheartedly agree with transparency when it involves providing the patient/consumer with information to make an important decision on their care. Obviously, this article was an attack on nonprofit hospitals. When consumers hear that term, they automatically believe that they do not pay taxes. That couldn’t be further from the truth. I was reminded by our Director of Reimbursement, that our local hospitals paid millions to the government in Medicare taxes. We were nonprofit, since we provided free services to the underinsured and noninsured. Reminder – it’s not free, because the employees don’t work for free.
There were many years when we had a negative bottom line, and years when the bottom line was barely positive. Medicare reimbursement, if and when increased, barely covered the increased costs of operating the hospitals. Most commercial insurance contracts are not much better at reimbursement, as the contract(s) may be negotiated as a % of Medicare.
Question – exactly which nonprofit hospitals in your research were paying their executives $10’s of millions? I certainly don’t recall our executives making that high of a salary, and likely not in the 7 figures. As required by 10-k reporting, highly compensated employees must be reported and made public.
Healthcare billing and payment is the least understood aspect of healthcare. I will share a personal example. Since our family has a history of hereditary heart disease, I had an ultrasound performed on my heart. The charge was $4,039, for a 1 hour procedure. Is that what the hospital was paid? Not even close. The Medicare allowable as it is called was $462.21, and that is what was paid by Medicare and my supplemental plan combined. So, your question probably is, “why is the charge so high”. It all starts back many years, as fees schedules are increased over time. Just like any other business, hospitals adjust their fee schedules and may use those to assist in negotiating with a commercial payer. Good luck with that.
We as a consumer sit on our fat, lazy butts and watch as our health declines. That is our fault. I recall meetings I had with doctors, where many times the doctor would say he/she wished their patients would listen more to their advice. I agree 100%. We demand a service to be available at our convenience, but then complain about having to pay for it.
Have you ever wondered why there are no longer any solo physician practices (or very few)? I go back to my earlier comment on reimbursement. Minimal reimbursement by government and commercial payors is not enough to offset increasing costs.
We think there is a simple solution, and there really is not. Socialized healthcare? Hah, I think not. Just talk to someone who has experienced such a system. It’s not free folks. Now that I have vented, I feel a little better.
When I was in purchasing the hospital was capped as to how much a patient heart monitor could cost and rent for. The paper bag the monitor holding the device it was placed in cost more than the entire heart monitoring device cost the hospital to buy new and was reusable. The government told the hospital how much to charge for the monitor even though it was less than the cost of the monitor. They allowed the hospital to charge so much for the paper bag to make up the difference, really for a paperbag. Congress is the problem with health care, NOT the solution.
A lot of rural hospitals are shutting down this year because they are losing money, and what is the root cause of that? The wages of hospital employees are rising along with other sectors in US economy so that is one reason for costs. The cost for liability insurance is a major cost of medical service & hardly anyone mentions that & is a reason that medical costs are up or the doctors are moving to other states or stopping practice in that area altogether. Just look at what is happening in states with tough abortion laws and the number of doctors that will deliver babies today?
The gov agencies exist to help and make money for the big corps. Only the corrupt miss the dept of education. Close most of them and create an independent org that gets bonuses when they audit a gov agency and find corruption. There needs to be incentive to clean it up.
Exactly! Why would a knee replacement, 2024, cost 0ver $230 000? We need all the government giveaway healthcare scams to be fixed, pronto! Also, I’d to ask why did many doctors get their PPP loans forgiven by Biden/Harris? My old doctor got over $1.4 MILLION forgiven using our tax dollars. An abomination of fraud and bribery during the so called COVID.
Thank you for all you do.
Why do hospitals charge so much? It’s because they have to take care of so many poor, uninsured people!!!! THAT’S IT! It’s not because they are greedy bastids it’s because many rural hospitals are struggling to survive! Hence, “Those that can pay subsidize those that cannot pay!” I don’t like it but the “gubbermint” mandates that hospitals have to take care of everybody regardless of the ability to pay NO MATTER WHAT!!!! I know as I was a primary care physician who worked in a rural hospital that couldn’t stay afloat without outside funds. They had an incredible endowment fund where the interest alone could cover operating costs and that alone kept the hospital afloat. If they didn’t have that, they’d have to close down long ago. I get sooooo.. Ticked off when people imply hospitals are ripping off patients. The ones with insurance pay (though insurance companies negotiate rates which is fine). The poor get free care and those on “gubbermint” aid doesn’t pay danged near enough to cover the stay!! You “rip-off” people make me sick. Signed, retired M.D. who worked in the trenches and you people don’t know anything about it!!!!!
Thank you AMAC for this informative article. Some of it I already knew, and I retired from my job, 25 years ago. Anything the government gets involved or supports, seems to attract thieves. No other way to put it.
This is absurd. How about nonprofit hospital, Cuero regional hospital owns 16 nursing homes? Gets tax dollars and donations galore.
AMEN! GOD MAKE IT HAPPEN!
I reported SSM for fraud. I received cataract surgery in the surgery center The copay was to be $160. When I received the bill they charged me the $225 That I would need to pay if it had been in the hospital. So I reported them for fraud. . They attempted to sue me for $2000 and sent it to collections. I called Medicare. They told me that I did not have Medicare, I had the company that I had selected and Medicare had no input into what they did. Noone is responsible.
Sen TV ads for Shriners Hospitals on LA CA TV
I started working in healthcare in 1971 until the recession of 2008. I spent 20 years in a non-profit with an unusual practice. Once a year, my department head would explain the financial status of the institution. I learned, back in 1987, about the difference between the cost of treating patients and the amount paid by Medicare and health insurance companies. One year I learned the Federal government would pay for an itemized billing of items and supplies used on each patient. Immediately, every item (from combs to arterial lines) sported a sticker to be attached to the patient’s record. The stickers were added up and sent to Billing. These costs were supposed to offset the loss of revenue from insurance. A few years later, the stickers disappeared because the Federal rules changed. Most fascinating were the interactions between Insurance Companies, Providers (Doctors, Labs, Therapy Providers, and Specialty Tech Providers), Vendors, the Federal Government, and the Medical Centers. Each group negotiated with the others to bring their income above bankruptcy and maybe a bit more. This whole topic is enormously complex.
We have the best govt money can buy…and buy, and buy, and buy…..
I avoid hospitals like I avoid vaccines, pharmaceuticals, doctors and pretty much everything that is associated with the medical profession. Considering the fact that it was the medical professionals who tossed their oaths of “first do no harm” to the winds in an effort to increase their profits during the “plandemic” (resulting in the deaths of millions across the globe) and make huge amounts of money by willingly mutilating the bodies of gender dysphoric minors, I’ve come to the conclusion that I’d rather die than put any faith or trust in them. They’ve sold their souls for the almighty dollar. I’ll just do my research regarding whatever ailments I experience and then treat myself. I’ll probably be much better off. Final note, it was one of those “$800 screws” that directly led to the death of my mother, because the egotistical surgeon used the screw rather than take the time to use a more secure surgical procedure.
You mention the HHS should monitor this, but it seems like RFK has his department so discombobulated that it will be hard to ever put it back together in the future. I worry about the rise of measles & polio cases in the world & what is being done.