Monday, May 18, 2009

HR 676 - The Good and the Bad - Part 3

Continued from Part 1and Part 2.

No institution may be a participating provider unless it is a public or not-for-profit institution.
Investor-owned providers of care opting to participate shall be required to convert to not-for-profit status.
The owners of such investor-owned providers shall be compensated for the actual appraised value of converted facilities used in the delivery of care.
There are authorized to be appropriated from the Treasury such sums as are necessary to compensate investor-owned providers as provided for under paragraph (3).
The conversion to a not-for-profit health care system shall take place over a 15-year period, through the sale of U.S. Treasury Bonds. Payment for conversions under paragraph (3) shall not be made for loss of business profits, but may be made only for costs associated with the conversion of real property and equipment.

Okay, this is a bit confusing, and not something that's been covered much in the media compared to the prior points. Fifty-nine percent of America’s non-federal hospitals are not-for-profit (Government Accountability Office (2008)). With a single-payer system, hospitals and other service providers will be practically forced to obey the requirements of that payer in order to stay in business. For-profit service providers will either shrink and offer only premium services at high cost to private payers (uncovered procedures or immediate procedures without waits), or they will have to make this conversion to not-for-profit status.

What do they have to convert? A common difference between for-profit (FP) and not-for-profit (NFP) hospitals is the presence of an emergency room (ER). ERs are expensive and tend to lose money, but are required for NFP status. The trade off is providing a lot of uncompensated emergency care instead of paying taxes. To work with HR 676, many FP hospitals would have to build ERs. The bill would have Treasury Bonds sold to pay for this construction, along with any other conversion costs, though I am not sure what else would be involved. They have 15 years to convert.

NFP hospitals are generally more efficient than FP hospitals. It sounds like the government will pay FP investors for the conversions. 15 years is a fairly long amount of time for conversion. After transition, we will have a more efficient system overall that cares more about health care provision and less about profit.

Everyone who currently profits from their FP facilities is going to fight the bill. They will not be compensated for "lost profits". FP facilities and private insurance companies will suffer immediately as many of their customers switch insurance. NFP facilities may not be able to accommodate a sudden rise in customers. There will be a stormy transition in which we do see a temporary increase in wait times for people with the federal insurance, which the opposition will capitalize on in their complaints, and an increase in misinformation as providers and private insurance providers compete.

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