The practice of medicine continues to be a lucrative business, at least for some doctors.
Only yesterday I posted about how medical insurance, unlike car or life insurance, is little more than passing on budget-killing costs to an increasingly needy public, and this morning I read in the Joplin Globe about a new “specialty hospital” that is to be constructed on the Kansas state line just west of Joplin and on the outskirts of Galena, pop. 3,287 (as of 2007). It is to be a $13,500,000 companion piece to the existing clinic run by Orthopaedic Specialists of the Four States. The Globe article carried this remark about the financing involved (emphasis supplied):
Ortho Four States and its doctors will finance the building and equipment, but under a contract expected to be approved today (10/27/2011) by the City Council, the city will own the building and lease it to the doctors.
City Attorney Kevin Cure, at Wednesday night’s meeting, said federal law prohibits doctors from receiving Medicare or Medicaid payments from patients at a hospital the doctors own. He said that made it necessary for the city to own it.
Cure said potential revenue to the city from the hospital operation is conservatively estimated at $177,000 in the first year to $1.6 million in year 10.
The financing here raises questions in my mind. The doctors are financing the hospital and setting the prices (except in the cases of Medicare or Medicaid patients, something discussed in comments under my “Insurance” post). The city of Galena clearly benefits from this arrangement – patients and staff patronize Galena businesses.
The city attorney says Galena anticipates an estimated $177,000 in revenue from the operation the first year, growing to $1.6 million in the tenth year. The nature of this “revenue” is isn’t clear to me, but I suspect it has something to do with how the city will come to “own” the 65,000 square foot building. Is it buying it? What is the city’s part of the investment, if any? Is it issuing bonds? Is it borrowing the money from the doctors? If so, at what interest?
Also questionable in my mind is the welfare of the taxpayers in all this. The Globe reporter says that the new building will be exempt from property taxes, so I assume that the cost of extending city services to the facility will be supported by the taxpayers. Maybe that’s a good deal for everyone, I’m not sure. I hope someone can answer these questions for me.
Let me be clear, I can’t fault doctors from trying to legitimately maximize their incomes, given the medical system we now have, but I am concerned that this deal appears to be a clear evasion of the intent of federal law designed to protect patients and taxpayers from conflicts of interest on the part of doctors.
And I leave you, dear reader, with these final questions. Are financial maneuvers of this nature symptomatic of why medical costs in the U.S.A. are more than double what they are in Canada and Europe? I believe they are. This is the profit motive at work. Does service suffer because of it? I don’t know, but I do know the effect on costs: in the absence of true competition (who shops for a hospital?), it makes them higher. Meanwhile, people all across the country are postponing needed care because of soaring costs, healthcare costs that are at the very heart of the national debt crisis. In my opinion we could reverse that by embracing a Public Option or a single-payer system.
- Does profit motive explain high rates of end-of-life surgery? (cbsnews.com)
- For Profit Medicine: An Oxymoron (gratiaetnatura.wordpress.com)
- Medicine and Service to Humanity (raymondolivercruz.wordpress.com)
- Dr. Oz motivates workers, greets patients at free LA health clinic (abclocal.go.com)