UPDATED Obamacare Endgame: 20 Hospital Systems Leading to Single-Payer

by Tom Barilovits

The Obamacare endgame is to consolidate hospitals locally, then regionally and nationally into 20 massive systems across the U.S., each with around 250 hospitals and thousands of clinics. Why? Because it’s easier to nationalize twenty hospitals into one Soviet-style medical bureaucracy (i.e., single-payer) than it is to corral the thousands of independent hospitals we have now.

Obamacare is using a two-sided squeeze plan – hospital consolidation on one side (driving up prices) and Medicaid expansion on the other. Private medical practices are dropping like flies, allowing powerful hospitals systems to control pricing, while Medicare and Medicaid steadily advance toward becoming the sole source of funds.

Here in Greenville, South Carolina, we can see the pieces on the chessboard moving in this direction. We gave a slideshow presentation about the situation to state lawmakers and various groups. Feel free to download the .pdf and share it with other folks. What is happening in Greenville is happening everywhere. Hospitals say they must consolidate to lower operating costs, but those proposed savings never translate into lower prices for anyone. In fact, as hospitals consolidate, competition is reduced and patient costs skyrocket because the hospital systems now have monopolistic pricing power over everyone, including the insurance companies.

There are many ways to fight this. In Greenville, we have been working on preventing one of the largest hospital systems in the Southeast from completely taking over healthcare across our entire state and beyond. Our effort has involved local citizens and local lawmakers. We really got going in late 2015. The Greenville Health System (GHS-15,000 employees and $2.2 billion in revenue) is very powerful from a political and financial point of view. It dominates the local community. We South Carolina citizens and state lawmakers have been working together to keep GHS from leasing out all of its operations and assets to a private nonprofit corporation. If GHS gets away with their 100-year takeover lease, they will quickly expand by gobbling up hospital systems across the state. The case will most likely be brought again before our State Supreme Court as GHS is a political subdivision of South Carolina (like a school district). It is owned by the taxpayers and governed by state law. As such, it cannot be farmed out to a private entity.

GHS is already too big and needs to be broken up into pieces in an open auction with the proceeds going back to the local taxpayers. This would also create additional competition by breaking GHS into two or more hospital systems. Our local citizen/local-lawmaker strategy worked to keep GHS from seizing control of our County EMS. If GHS had gotten control of our EMS, they would have controlled even more patient flow to area hospitals than they already do by virtue of gobbling up area medical clinics and offices.

Another approach we’re taking is talking with the U.S. Federal Trade Commission. The FTC has been taking a much more active role in anti-competitive behavior of regional hospital systems, lately. There was a recent FTC case in Albany, Georgia that went all the way to the U.S. Supreme Court. The issues in that case had many similarities to what is happening in our neck of the woods.
UPDATE 3/29/16 – The FTC has also written extensively on the importance of healthcare competition and how the lack of real competition hurts the poor the most in our society.  Hospitals claim that they could provide more charity care for the poor if they were freed from competitive pressures, however FTC research determined the opposite is happening– less competition reduces charity care for the poor and could increase prices for the uninsured.

We are also working with local county lawmakers to remove GHS’ property tax exemption. In 2009, GHS sold and leased back about $200 million in GHS buildings with many of those deals reducing property taxes by 90 percent. These deals created doughnut-hole properties where GHS still owns the parking lot and leases the building back from a real estate investment company. They finagle their way into lower property taxes and take the upfront cash from the sale-leaseback deals to build more hospitals which are, in turn, also leased out. They keep doing this sale-lease-back technique and, as a result, we now have several new healthcare facilities in our area that are massively underutilized. GHS pays little or no taxes on empty lots.

Our property tax approach is bolstered by the 2015 case AHS Hospital Corp., d/b/a Morristown Memorial Hospital v. Town of Morristown. Judge Vito Bianco ruled that AHS was not just a simple medical charity but had become a highly complex business conglomerate conducting for-profit activities. The judge ordered AHS to pay $26 million in back property taxes. The ruling, linked on our website, really spells out how the hospital system operated. There are now 12 other similar cases pending in New Jersey. Cases are also beginning to appear in other states like Illinois where one city won on appeal.

Hospitals across the U.S. have avoided local, state, and federal taxes and have used those funds to pay off politicians who pass more laws that end up giving hospitals even more financial and political power locally, state-wide and nationally to the detriment of patients, healthcare professionals, our communities, and businesses large and small. The only ones that come out ahead are the hospital executives who earn multi-million dollar salaries and walk away with giant golden retirement parachutes via these hospital consolidations taking place across the U.S.

Hospital consolidation should be opposed, not only because it gives rise to crony deals and unjust enrichment, but because it will ultimately enslave us with single-payer – while the cronies laugh all the way to the bank.

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Tom Barilovits is a Healthcare Free Market Advocate in Greenville, South Carolina