Senator Sanders: No, Saving Hospitals Actually Isn’t a Solution to Our Broken Healthcare System

This week, 2020 presidential hopeful Bernie Sanders introduced a bold and certainly ambitious idea to create a $20 billion emergency trust fund that local or state governments could tap into to buy hospitals on the chopping block.

Though Sanders hopefully has good intentions, bailing out unprofitable hospitals isn’t the fix for our failing healthcare system. Rural hospitals do play a very important role. In the hard-to-reach parts of this country, residents may only have — at best — somewhat-speedy access to a single hospital. And if that one nearby hospital closes, they may be left with little to no other options for emergency services.

But for the hospitals struggling financially outside of rural areas, propping up a broken business model with taxpayer dollars is not the long-term fix we need. What we really need is a nationwide push to deliver truly value-based care with proper primary care as a foundation as opposed to status quo fee-for-service care, and it’s a push that can easily be driven by employers (including the federal government who is a large employer), who provide health coverage for half of Americans — most of the non-elderly and non-low income.

Right now, hospital profitability is all based on “heads in beds.” When patients have too many places from where they can receive care, each place sees fewer patients overall. And when this happens, that means hospitals have beds they need to fill if they hope to turn a profit. That’s unfortunately how most patients are viewed in today’s healthcare system — as sources of profit — and why hospitals may unnecessarily keep patients overnight even if the condition they come in with is something that can be handled from home.

As the biggest area of healthcare spending, nothing has done more to cause wage stagnation and decline for the working and middle class than hyperinflating hospital charges. The graphic below depicts the economic pain healthcare has brought.

At the end of the day, though, hospitals can’t choose when and how many patients walk through their doors. So, some have gotten creative and taken matters into their own hands. Niyum Gandhi, MD, the Chief Population Health Officer at Mount Sinai confirms this shift is taking place, saying:

I think it’s pretty clear we’re NOT at the right capacity for US hospital beds. It’s why some (but not enough) health systems are addressing it proactively by decreasing inpatient capacity with a simultaneous expansion of digital and home-based care.

Such low-cost, convenient services are common in value-based care settings, where providers’ income is dependent upon the quality of their patient outcomes­ — not by how many tests they order. Value-based primary care physicians often spend more time with their patients, talking through their lifestyle choices and the most affordable, beneficial treatment plans, plans that usually involve patients pursuing less invasive and drastic approaches — like going to physical therapy for back pain instead of taking painkillers or undergoing surgery — that often eliminate the need for any sort of hospital intervention.

Employers can ensure this happens by simply forgoing fully-insured plans from old-line insurance carriers and using that money to self-fund a health plan they have the power to design themselves. The best will incentivize employees to visit local value-based physicians by waiving co-pays for those visits, and simultaneously disincentivize employees from visiting health systems delivering low-value care by forcing employees to bear more of the financial burden from low-value encounters.

As Dr. Sachin H. Jain, a physician within his own healthcare delivery organization, CareMore Health, points out, “ … If populations get healthier, upstream management gets better, we will need fewer hospitals, not more.” Once again, fewer hospitals aren’t a bad thing if we fully committed to providing value-based care at the outset. Studies have shown that hospital closures don’t increase mortality rates, and especially as urban hospitals sit on precious plots of land, shuttered hospitals could be better utilized for affordable housing or office space.

One of the most respected health care leaders in the country, David Feinberg, MD, CEO of the renowned Geisinger Health System, stated that he believes his “job ultimately is to close every one of our hospitals,” in order to take care of individuals at home, work, and school. The following is an excerpt from the chapter on Economic Development 3.0 in The Opioid Crisis Wake-up Call: Healthcare is Stealing the American Dream. Here’s How We Take it Back (PDF, see link below for free download of the entire book) that outlines the silver lining from hospital closings:

As overcapacity gives way to hospitals optimized for the health of communities, those communities will realize a bonus: hospitals are often in locations with high real estate values. According to David Friend, chief transformation officer at the consulting firm BDO in Boston, “a hospital could be worth more dead than alive.” Hospitals are often in city centers with great access to transit. Wide hallways, thick walls, and high ceilings make them easy to convert to housing. Communities have repur-posed hospitals to a wide variety of uses, from low-income senior housing to health and wellness centers to office space.

Being alarmed by a hospital closing is understandable. However, experience shows that this can open great opportunities while rarely affecting health outcomes. An analogy from military bases is enlightening: the closing of Philadelphia’s naval ship-yard was bitterly fought, yet now the repurposed naval yard is the most dynamic development in Philadelphia.

Forward-looking civic leaders, with the Economic Development 3.0 mindset, increasingly understand are acting on that hospitals, and tax-exempt hospitals in particular, have levied a very heavy “tax” burden on the working and middle class — a group that Senator Sanders purports to be concerned about. The median household now spends more on hospitals (much of it hidden) than federal taxes as the graph below highlights.

Wise politicians and healthcare purchasers are realizing that things have gone out of whack as the following graphics demonstrate:

So, instead of spending billions so that local officials can save their hospitals, we should let non-rural hospitals close and channel that money into more meaningful aspects of economic development: housing, business, education, safety, etc. When hospitals close, we have everything to gain and, contrary to popular belief, not much more to lose than we already are.

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Dave Chase is the co-founder of the Health Rosetta (a LEED-like organization for healthcare), and author of the book, “The Opioid Crisis Wake-up Call: Health Care is Stealing the American Dream. Here’s How We Take it Back.” See the Health Rosetta website for how to get involved, resources and how to join others to support its mission.