Katie Thomas and Jessica Silver-Greenberg report for The New York Times on how a big non-profit hospital system took money that should have been funneled into patient care in a low-income community and used it to boost its profits. It leaves one to wonder why Medicare ever would pay hospitals and other entities upfront and allow them to decide how to spend it–as it is now doing through its direct contracting experiment–rather than paying hospitals and other entities for the services they deliver.
Bon Secours Mercy Health generated tens of millions of dollars in profits through a federal drug discount program that allows it to get drugs at a very low rate and charge health insurers the going rate for them. This 340B drug discount program is available only to hospitals serving people with low incomes. In exchange, Bon Secours is supposed to take the revenue it generates and allocate it to improving its facilities and care for low-income patients.
But, Bon Secours had other visions for what to do with the profits it generated in a low-income community. It chose not to invest in an ICU, up-to-date medical equipment or certain types of specialists. Rather, it cut staffing and forced its patients needing specialty care to wait extended periods for appointments outside their community, putting them at risk. It invests a lot of its profits in its facilities serving wealthier populations.
Bon Secours and patients at its facilities serving wealthier patients benefit enormously from the federal government’s 340B program. The 340B law was intended to give non-profit hospitals serving poor patients in low-income communities an extra injection of cash through access to highly discounted drugs that could be charged to insurers at higher cost. But, the law does not require hospital systems to report how they spend their profits, much less to take the revenue they generate from this program and invest it in their hospitals serving poor patients. And, the New York Times indicates that many hospital systems are not making these investments.
Moreover, non-profit hospital systems have used loopholes in the law to create clinics in wealthy communities, which are legally outposts of their facilities in low-income neighborhoods. As a result they can benefit from the 340B program at these clinics as well. The financial benefits can be enormous.
For one example, the cost of Keytruda, a cancer drug, is around $3,444 under the 340B program. But, private insurers will pay $25,425 for that drug. A hospital profits more than $21,000 on one vial of this drug alone.
In a fair and decent US, all hospitals and all patients would benefit from fairly priced drugs, and pharmaceutical companies would not be able to gouge patients, insurers and hospitals. Drug prices set at the price other wealthy countries pay would bring down health care costs considerably, making health care more affordable for everyone.
It’s a travesty that in the richest nation in the world, even health care programs designed to help non-profit hospitals help poor communities are not serving poor community needs.
Here’s more from Just Care:
- Hospitals find a lot wrong with Medicare Advantage
- Hospitals still not disclosing their prices, violating the law
- For-profit hospitals are causing rising medical debt and personal bankruptcy
- Which states have hospitals that deliver appropriate care, good patient outcomes and invest in their communities?
- One in four people with Medicare harmed in hospital
Leave a Reply