Time Magazine: Nonprofit Hospitals Were Introduced to Maintain Health Care Profit, Not to Provide Charity

Dr. Colleen Grogan, a health policy scholar at the University of Chicago, has written an eye-opening history of nonprofit hospitals' government funded expansion, not for charity but as an expedient necessary to preserve health care profit making.  Obamacare is premised, in part, on the idea that nonprofit hospitals have a role to play in facilitating universal health care.  But here are the opening few paragraphs of Dr. Grogan's Time Magazine article published yesterday. The article makes the interesting and provocative assertion that nonprofit hospitals were proposed only as a fallback defensive measure in profit-seekers' efforts to prevent universal health care and maintain the very profitable market-based allocation of health care services.  

In June, a New York Times investigation revealed that a wealthy nonprofit hospital system in the Midwest has been withholding care from debt-strapped patients. This revelation highlighted how, when it comes to healthcare, “nonprofit” is far from synonymous with “charity.”

Instead, many nonprofit health systems employ aggressive collections procedures that prioritize profits over people. And while some see them as a byproduct of the modern medical system, these procedures are actually nothing new. For more than 70 years, the health care industry has used public relations campaigns to legitimize medical debt and hide the large profits they make. The result is tens of millions of Americans trapped in debt—all for care in hospitals subsidized by the public.

President Franklin D. Roosevelt tried to include national health insurance in his New Deal in the 1930s. When he was unsuccessful, his successor Harry Truman tried again. But like Roosevelt, he ran into bitter opposition from the American Medical Association (AMA) and the American Hospital Association (AHA). The medical associations demonized the idea of a national health insurance program as socialism. Yet, they understood that linking national health insurance to the Communist menace wouldn’t be enough to defeat such proposals. They had to offer an alternative—one which promised Americans access to health care, especially expensive hospital care.

Their answer was to push for nonprofit hospitals. 

George Bugbee, the AHA’s executive director and the main Washington lobbyist for the nonprofit hospital sector, worked closely with Surgeon General Thomas Parran to flesh out details of what in 1946 would become the Hill-Burton Act. The bill provided nearly $4 billion for nonprofit hospital construction during the 1950s and 1960s. This money ensured that communities would have hospitals—but it offered no legal commitment to providing Americans with health or hospital care.

. . . 

This is a very good read.  The book is due out soon.

darryll k. jones