Hospitals Put the ‘Profit’ in ‘Nonprofit’ 

What should we do when brutal violence happens in our communities? When something terrible happens, many of us turn away. This is a natural response to painful truths. But it will not help us change things for the better. No, to make change, we

How can community hospitals aspire to become dominant regional medical centers in a generation without relying on community fund drives, etc.? History (now of minimal importance in Idaho universities) might aid understanding.

In 1982, TEFRA [Tax Equity and Fiscal Responsibility Act] was signed into law, attempting to balance the federal budget. That act substantially changed Medicare by allowing hospitals great leverage controlling (and redistributing to themselves) some physician incomes.

These changes first applied to income for procedures' billing, especially for those performed in hospitals or in their other owned facilities.

This greatly increased hospital revenues. Surges followed in hospitals buying physician practices and leading to greatly increased incomes for these entities still deemed "nonprofit," allowing them to morph into "medical centers."

To retain their "nonprofit" status, other expenses such as real estate acquisition for "growing service needs," medical practice purchases, etc., were needed to balance their nonprofit bottom lines.

Hospital administrations once led by active-informed/retired religious and lay leaders then became aviaries of high degreed (and very well paid) administrators concerned with market share, control and (hopefully) quality.

Corporate medicine and medical insurance corporations had arrived. Thereafter, local political and legal battles followed over their further controlling physician practices and their private property encroachment.

For further health care politics and economics reading, the Harper's July 2015 issue is recommended. More recent studies published in JAMA and elsewhere show health care costs to not be reduced nor health care insurance premium increases limited by America's arrival of corporate medicine—especially in our smaller cities.Idaho should take note.

—Frederick W. Bauer, MD


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