Monday, April 15, 2013

"Prime" Controversy: Profit vs. Patient Health?

Does profit-seeking conflict with the best healthcare interests of the patient? That question is at the root of a controversy surrounding Prime Healthcare Services' proposed acquisition of two New Jersey hospitals.   

Despite hints of "alleged misdeeds," the main objection to Prime revolves around it being a for-profit business. As Dan Goldberg reports:

Assembly Speaker Sheila Oliver said Prime’s business model is “very concerning,” and is imploring the Christie administration to reject Prime’s application. 
“I feel Prime has demonstrated they are more interested in a business model than being a solid health care provider,” Oliver said.

A correspondent more succinctly reflected the opposition's true motivations:

There should be no profit in healthcare. We should pay our doctors very handsomely, but when it comes to Wall Street firms making money off of people's pain and suffering in the guise of providing medical care, this should not be allowed.  Prime Healthcare's record is ATROCIOUS. It is clear they have willfully manipulated the law, abused the system and provided inadequate care--all in the name of capitalism and the enrichment of a few.

Complaints by "unions, legislators and activists [include] Prime’s history of renegotiating insurance contracts, separate incidents of layoffs at newly acquired hospitals, accusations that include Medicare fraud, failure to meet minimum health standards, [and] lawsuits with labor unions...." 

"But," notes Goldberg, "the overlapping concern is over Prime’s business model." In other words, Prime seeks to streamline hospital operations to maximize profits.

As I pointed out to the above correspondent,  healthcare providers do not "make money off of people's pain and suffering." They make money providing products and services that relieve people's pain and suffering and save lives. Their profits are generated through voluntary trade, just like any other business. 

Profits earned in such manner are not only legitimate, but noble, and those who earn them have a moral unalienable right to their profits. This most certainly pertains to hospital management companies. Those who are ideologically opposed to for-profit healthcare are free to refuse to patronize such companies. But no government has a legitimate right to legally forbid for-profit healthcare companies, and no one has a right to demand that of government.

Granted, our healthcare market is thoroughly corrupted by political interference into the market, and it is often hard to separate legitimate profits from "profits" resulting from gaming the third-party-payer system. But that is because we do not have capitalism or free markets in healthcare in America, and that  is the essence of the problem. 

In the same vein, another correspondent said:
People are NOT a business and healthcare is NOT a commodity. Nor are people's lives. 
My response:

This is an arbitrary assertion with no basis in fact. Without people, there are no businesses. Business is the unsung hero that betters people's lives--the bridge between theoretical knowledge and practical, life-enhancing goods. So-called "non-profits" are nonetheless, essentially, businesses.

Healthcare products and services, like everything else that sustains human life, are man-made.  They come about by individuals thinking, working, and investing, and are not immune to the same moral and economic laws governing other markets; such as, the individual's rights to voluntary trade and contract, and the laws of supply and demand. The mess that has become of our healthcare is the direct result of attempting to circumvent those fundamental truths.

By "mess" I meant overpriced mess. The quality of American healthcare continues to be excellent.

Whatever Prime's "misdeeds" turn out to be, if anything, it is a law enforcement issue and the company is innocent until proven guilty. There are also complications relating to government interference into the healthcare market, such as a $252 million state loan for a new emergency facility at one of the hospitals, which Prime apparently would only partially pay back--a seeming partial free ride for the company. Some object on these grounds:

Renée Steinhagen, executive director of New Jersey Appleseed Public Interest Law Center, is ideologically opposed to for-profit hospitals. She doesn’t believe taxpayers should be helping. 
“Why should I take an asset the taxpayer has put that much money into and hand it over debt free?” she said. “If we are absorbing the money, we should get the hospital.” 
She, as well as others such as Oliver, worries any for-profit model is going to put the bottom line ahead of patient care.

Conflicts-of-interest are inherent in government loans and subsidies, because they are funded by coercively seizing taxpayer dollars. Would he object if a non-profit were buying this hospital? After all, the taxpayers would still be on the hook for the moneyWho the "we" is that "should get the hospital" isn't clear, but if Steinhagen were really concerned about the taxpayers, she would be fighting against government loans, not for-profit hospital management companies. 

Anyway, these issues have nothing to do with the fundamental issue. It's clear the anti-profit zealots, who have no idea how profits are generated, are using side issues to rationalize their ideologically-driven opposition. 

Prime should be lauded for its record of profitably operating its hospitals, and the state has no business blocking it acquisition plans. It should ignore these zealots, and protect the rights of Prime Healthcare Services and the owners of the two hospitals to voluntarily contract for the sale.

Related Reading:

Profiting From Healthcare is Moral

The Choice is Profits or Guns, Freedom or Tyranny

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