Speaking of government-coddled industries…. Virginia’s hospitals increased annual profits 10.7% in 2014 compared to the year before, according to the most recent data compiled by the Virginia Health Information data and reported by the Thomas Jefferson Institute for Public Policy (TJI).
“Hospitals campaign for Medicaid expansion, and want to maintain the state’s control over how hospitals and doctors can invest in new equipment and additional patient beds under the current Certificate of Public Need (COPN) law, saying their financial situation is so precarious that they need these programs to survive,” said Michael Thompson, president of the TJI. “But the financial numbers from the hospitals themselves seem to tell a different story.”
Bacon’s bottom line: I don’t begrudge strong profits — profits are necessary for a functioning market-based economy. But these are monopoly/oligopoly profits. I do begrudge monopoly profits gained by throttling the competition. Like the higher ed system (see previous post), Virginia’s hospital sector has prospered through rent seeking.
There are two ways to go from here. One is to increase the government role as mediator between hospitals, patients and health care funders in divvying up the revenue pie — a zero-sum game. The other is to evolve toward a market system based upon competition, productivity and innovation that drives down costs and improves outcomes — a winning formula for all.
If General Assembly Republicans want to thwart Medicaid expansion next year — as they rightly should, on fiscal grounds — they need to paint a vision for a market-based health care system. I’ve seen baby steps in that direction like the All-Payer Claims Database. But we’ve got a long way to go. Where’s the vision? Do Republicans offer more than, “Repeal Obamacare,” and “Just say no to Medicaid expansion?”
To win the war of ideas, you…. need ideas. The Dems have bad ideas. But bad ideas trump zero ideas. C’mon, Republicans, up your game.
Update: The Virginia Hospital and Healthcare Association has responded to the TJI report. While the overall industry remains profitable, states the VHHA, many local hospitals, mostly rural, are unprofitable. Among rural providers 17 of 37 operated in the red in 2013. Meanwhile,”the financial challenges that produce negative operating margins are real and worsening.” See the full response here.
