Thoughts from Ken Kaufman

In Defense of Not-for-Profit Healthcare

3 minute
Hospital team

How soon they forget. Throughout 2020 and 2021, the media was full of praise for hospitals and healthcare workers on the frontlines of the COVID-19 pandemic.

When the pandemic was new in the spring of 2020, Americans were effusive in their appreciation of hospitals and the people who worked in them. At that time, a COVID vaccine was a distant dream, and personal protective equipment was so scarce it had to be rationed and reused. To all who valued the safety of home in those early days, it was clear that healthcare workers weren’t running away from danger; they were running toward it.

In New York City, which was the U.S. pandemic epicenter that spring, a curious ritual played out every evening at 7 o’clock. People emerged from quarantine onto balconies, fire escapes, front stoops, and rooftops to cheer for their city’s healthcare heroes using whatever makeshift noisemakers they could find. They shared videos of these flash events on social media. Later, as the pandemic spread across the country, yard signs popped up in cities large and small: “A healthcare hero lives here”…“Thank you, healthcare heroes.” Press coverage conveyed a sense of awe at both the personal sacrifices and the heroic efforts healthcare workers made on a daily basis.

That was then. This is now: We are currently witnessing a media free-for-all challenging the tax-exempt status, financial practices, and ostensible market power of not-for-profit hospitals and health systems. This is happening despite the fact that thousands of Americans are still hospitalized with the COVID-19 virus and more than 400 are dying of it on any given day. And despite the fact that America’s hospitals are dealing with an exceptional and unexpected aftermath of the pandemic.

Today, the financial health of America’s hospitals is in serious jeopardy. Indeed, our projections show that 2022 is shaping up as the worst financial year for hospitals in memory. In the first six months of 2022, hospital operating margins fell 102% compared with pre-pandemic levels. Median operating margins for hospitals have been negative through all of 2022. Through the end of 2022, hospitals are projected to lose billions of dollars with no foreseeable federal support. Expenses are projected to increase nearly $135 billion over 2021 levels. More than half of hospitals are projected to have negative operating margins in 2022.

At the same time, shortages of nurses and other clinicians are putting severe pressure on clinical teams and creating backlogs of patients in desperate need of hospital beds. As one hospital nurse put it, “We’re drowning.”

There are other, more nuanced stories behind healthcare industry headlines. For example, media commentators often applaud the big-tech companies disrupting healthcare, such as Amazon, Google, and Apple, for their customer-centric, technology-savvy approach to healthcare. What doesn’t get mentioned is what hospitals do every day that these other companies do not and will not: Take care of people with the most critical ill patients requiring the most sophisticated treatments and procedures. Take care of people who do not have insurance or the means to pay. And do all that 24 hours a day in a face-to-face environment. These big tech players don’t have the costly stand-ready responsibilities or the duty to provide unprofitable but medically essential services that hospitals do.

We as a society need to realize that all of these “must have” clinical services, which we and our families depend on in every kind of healthcare situation, don’t just magically appear. It requires the work and cooperation and self-sacrifice of doctors, frontline healthcare workers, administrators and Board members. It requires enough money, the right facilities, and some of the most complex processes and procedures operating within any part of our overall economy. It requires the hardest of hard work each and every day.

During a period marked by both existential challenges and daily crises, our country’s hospitals and healthcare workers found a multitude of ways to meet the moment, and without question saved countless lives. But hospitals and healthcare workers aren’t looking for impromptu serenades. Or even yard signs. They’re just doing their jobs. Hospitals and healthcare workers are simply looking for our support and validation in the face of extreme economic and organizational headwinds.

The cooperation, the support, and the best thoughts and intentions of all who are involved in the American healthcare system, from those who provide the care to those who provide the funding and to the patients who participate, are essential for that system to be one we can all be proud of.

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