Feeding the Beast

By Douglas Tardio, HealthCost Co-Founder

A recent article in the New York Times identified a concern that “The Health Act Repeal Could Threaten the U.S. Job Engine.” The article suggested that the Affordable Care Act had taken unemployed factory workers and provided them with healthcare jobs.

In fact, the Deputy Mayor for Economic Development for the city of Akron, Samuel D. DeShazior said, “People who used to make deliveries to factories are now making them to hospitals.”

Is this an incredible achievement? Well, let’s take a closer look.

When you subsidize growth you can make just about anything grow. While the government offered money for hospitals to grow and hire more, hospitals were eager to find ways to qualify for these dollars anyway they could. Hundreds of millions of dollars in government subsidies were spread out to any and all takers in the healthcare industry. Hospitals merged and a feeding frenzy to buy up nearly every physician practice ensued—large and small. The mantra seemed to be let’s build, build, build and hire, hire, hire. The government offered money, and hospitals found ways—necessary or not—to accept it.

The result, not surprisingly, is that hospital systems across the country are now the largest employers in many towns. Yet despite this growth, hospitals are no more efficient now than they were before. Quality is no more improved and patient outcomes aren’t much better.

Virtually nothing has improved while hospitals have grown in size and revenues. Those hospitals are still fighting over the same doctors who were already there. Those doctors are still fed up with working ever more hours for ever decreasing returns. Meanwhile, hospitals hired more staff. Lots and lots of staff. Enough to require more space and the need for more buildings. I think by now you get my point: hospitals grew, sure, but what is growing for the sake of growth if nothing else improves?

Government subsidies grew as fast as the buildings erected to justify them and the big healthcare machine grew and grew. Meanwhile, the average American household saw increased healthcare premiums and soaring out of pocket costs. Because someone has to feed the beast…and it’s hungry.

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