The Money Trail For Medical Malpractice

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According to more than half of American residents, paying for medical care is now considered a hardship. The continual rise of out-of-pocket health care costs – fees not covered by insurance – have skyrocketed, causing patients to cut down on medical expenses by either going without treatment, refusing to fill prescriptions or even venturing outside of the U.S. for medical treatment. Also, with the rising rate of medical malpractice cases, it’s evident that the quality of care is diminishing over time. With the current state of the healthcare system, many individuals are asking why things are the way they are and how did the field of medicine let things pan out this way.

Distinguishing For-Profit, Non-Profit and Government Healthcare Delivery Systems

Experts are blaming this issue on the national expansion of the for-profit medical system. For-profit medical facilities are hospitals, urgent care centers, dialysis clinics etc. that are owned by private investors or public shareholders. Profits received through these medical care facilities are distributed to investors who have the obligation of paying income and property taxes.

According to the American Hospital Association (AHA), there are currently 1,034 for-profit hospitals in the United States – an alarmingly high number in comparison to prior years. In fact, the number of for-profit facilities has doubled in the past 10 years.

Non-profit and not-for-profit hospitals are corporations that have an obligation to invest all profits made into the organization. Like many other non-profit organizations, these healthcare delivery systems are exempt from paying federal and state taxes on income and property. And unlike for-profits facilities, is required to reach out to the community regarding benefits offered by the hospital. The AHA estimates that there is a total of 2,845 hospitals in the United States. There are 212 hospitals owned by the federal government. [1]

The heightening competition between for-profit and non-profit medical care is an indicator that the American health care system is undergoing an incredibly accelerated socio-economic change.

The Pros and Cons of For-Profit Healthcare

Whether this change has had a negative or positive effect on the U.S. healthcare system, however, is up for debate. The for-profit system has been fiercely contested by patient advocates and labor unions who assert that these facilities’ interests are more influenced by investors than patients. Meanwhile, supporters of the system argue that investments made in innovative technology and hospital funds equate to better overall care. Despite the differing perceptions on the system’s growth, numerous studies have been conducted highlighting the pros and cons of the system. For the sake of this piece, we’ll focus on both the ethical criticisms and advantages of the for-profit healthcare system.

Access to Healthcare

Following the implementation of the Affordable Care Act (ACA), also known as Obamacare, nearly nine million people gained insurance. The healthcare legislation expanded government programs like Medicaid, Medicare and the Veterans Administration, and bolstered employer coverage to millions of workers. However, critics are saying that the access to healthcare is still severely limited in a for-profit hospital system. Skeptics usually base their arguments on their concern for equality and fairness. They claim that since the United States has maintained a wealthy and flourishing society for its citizens, and that privilege comes with an obligation to meet the needs of all its members. With the increasing cost of care, the refusal of insurance companies to cover these costs and the constant reductions in government spending, healthcare has been restricted for the demographics of Americans who need it most: the poor, the elderly and those with fatal medical issues. Skeptics claim that growth of the non-profit system has only exacerbated this issue.

One of the characteristics of this system that could be a roadblock to accessibility is the incentive of these hospitals to operate based on what is profitable rather than investing in the interests of the community. Critics claim that each for-profit hospitals’ supposed focus on the “profitability” of a patient – patients with good insurance policies – has overshadowed a patient’s fundamental right to care. Non-profit medical facilities have traditionally provided services to the less fortunate by charging paying patients more for their services and subsidizing the funds to the poor. That way, non-paying patients who really need care have access to it. But for-profits refuse to provide uncompensated services to most non-paying patients and have chosen to admit mostly paying patients into these hospitals. For-profit facilities have also been known to participate in the act of “patient dumping.” This occurs when a patient is denied of medical screenings and treatments that the facility has the capacity to provide and transferred to another facility, simply based on the kind of insurance a patient has. According to a study conducted by the Department of Health and Human Services (DHHS), for-profit hospitals partake in patient dumping nearly twice as often as non-profit hospitals. [2]

This trend of servicing “profitable” patients has influenced where for-profit and non-profit medical facilities are located. According to a recent study conducted by Health Affairs, hospitals are now using geographic expansion strategies to “capture” well-insured patients. [3] Since for-profit hospitals do not service low-income patients or patients with inadequate insurance policies, these people are migrating to non-profit hospitals that will render them care. As a result, non-profit facilities are picking up the slack and becoming overcrowded, causing hospital officials to consider moving to places where patients have better insurance coverage.

A recent example of this phenomenon are the current plans announced by the St. Elizabeth’s Hospital in Southern Illinois, a hospital with deep ties to the people in the community. [4] It’s mission statement declares that the hospital seeks to “embody Christ’s healing love” to the aged, the sick and the poor, and has done just that since its establishment in 1895. However, within the last ten years of its existence, St. Elizabeth’s has been experienced serious financial troubles. Many credit the decade of substantial monetary losses to the result of treating large amounts of low-income and uninsured patients from surrounding neighborhoods Belleville in East St. Louis, deemed one of the poorest cities in the Midwest. And like a rising number of hospitals around the country, St. Elizabeth Hospital officials have decided to close the large, 303-bed hospital and move to O’Fallon, a rapidly growing wealthy city in northeast St. Louis. Local residents, community leaders and clergy claim that the hospital is abandoning the poor for profit incentives.

Many non-profit hospitals like St. Elizabeth’s are struggling to stay afloat for similar reasons. The issue of rising costs, coupled with mediocre medical equipment and overcrowding have put non-profits in a tough spot. Some hospital officials choose to close shop while others are being sold and bought by for-profit medical groups. [5] In circumstances that reflect the latter, most people in these communities are simply relieved that their local hospitals are still standing. Only time will tell if the deals compromise the benefits of patients and their accessibility to healthcare.

The Provision of Healthcare Services

Critics of the for-profit health care delivery system have concerns about the services rendered and not provided in for-profit hospitals, and the motivations behind these decisions. A new study claims that for-profits are more likely to perform unnecessary procedures in order to rack up revenue. A study conducted by a California women’s right advocacy group by the name of “She Knows” provided an explanation for the surging rates of cesarean sections performed during deliveries nationwide. [6] The group concluded that a woman was 17% more likely to have a C-section at a for-profit hospital rather than a non-profit because surgical births cost twice as much as vaginal ones. The performance of more C-sections means more profit. The study also revealed that once the baby is successfully delivered, he or she ends up in a pediatric ICU, whether there were complications or not.

One characteristic of for-profit hospitals that many patients admire is the modern, up-to-date facilities and services. Most of these facilities have state-of-the-art medical devices, experienced and knowledgeable specialists, and a large and thriving cardiac department. But according to a study conducted by Health Affairs, visitors are less likely to witness family planning services, psychiatric care and emergency rooms in these medical facilities. [7] These services have a very low rate of return on investments. In fact, more money would most likely go into providing these services than the money they will ultimately make, and some private facilities are simply refusing to offer them. Fortunately, not all for-profit medical services have opted out of providing “unprofitable” services and many do try to provide these services despite the costs.

The Quality of Care

The quality of care is the most important aspect of healthcare. The state of the quality of the healthcare system heavily impacts the general health of Americans as well as mortality rates. Fortunately, numerous studies show that the quality provided by both non-profit and for-profit hospitals are consistent. When non-profit medical facilities are bought out by for-profit groups, the hospital’s financial health is definitely boosted, but the switch generally has no effect on the quality of care rendered. This also establishes an interesting point highlighted by Harvard researchers: more innovative and new resources obtained through the conversion to a for-profit hospital does not indicate better care for patients. [8] But are for-profit medical facilities making quality a priority because they care about patients, or because they want to be able to compete with other hospitals? Either way you slice it, critics are just glad quality is being considered. For now, scientific research has not specified which delivery arrangements are linked to the best outcomes. [9]

Although the quality of care is not compromised in most cases, the times in which you’ll be admitted and seen by a medical professional varies based on the type of delivery system. For-profit hospitals have been known to have astoundingly short wait times and efficient patient to doctor ratio, while non-profit emergency room wait times be considered more lengthy. As mentioned above, since for-profits can turn down non-paying customers, or customers that are not well-insured, the remaining non-profit medical facilities in the area are left to pick up the slack and serve the poor.


[1]Ahahospitals. “Fast Facts on US Hospitals.” American Hospital Association. Health Forum, 01 Dec. 2016. Web. 16 Mar. 2017.

[2] Galen, E. “World Socialist Web Site.” It’s Not like “ER”-The Scandal of Patient Dumping in US Hospitals – World Socialist Web Site. World Socialist Website, 07 Nov. 2001. Web. 13 Mar. 2017.

[3] Emily R. “Hospitals’ Geographic Expansion In Quest Of Well-Insured Patients: Will The Outcome Be Better Care, More Cost, Or Both?” Health Affairs, 01 Apr. 2012. Web. 13 Mar. 2017.

[4] ‘Kaiser Health News’. “Why Urban Hospitals Are Leaving Cities for Fancy Suburbs.” Governing. International Business Machines, 14 Apr. 2015. Web. 13 Mar. 2017.

[5] Galen, E. “World Socialist Web Site.” It’s Not like “ER”-The Scandal of Patient Dumping in US Hospitals – World Socialist Web Site. World Socialist Website, 07 Nov. 2001. Web. 13 Mar. 2017.

[6] Jenny Gold, Kaiser Health News. “Mergers of For-profit, Non-profit Hospitals: Who Does It Help?” USA Today. Gannett Satellite Information Network, 13 July 2010. Web. 13 Mar. 2017.

[7] California Watch. “Do You Really Need One? California For-Profit Hospitals Are Performing More C-Sections | SheKnows.” Do You Really Need One? California For-Profit Hospitals Are Performing More C-Sections. She Knows, n.d. Web. 13 Mar. 2017.

[8] Horwitz, Jill R. “Making Profits And Providing Care: Comparing Nonprofit, For-Profit, And Government Hospitals.” Health Affairs. N.p., 01 May 2005. Web. 13 Mar. 2017.

[9] Rice, Sabriya. “Hospitals Switching to For-profit See No Drop in Quality.” Modern Healthcare, 21 Oct. 2014. Web. 13 Mar. 2017.

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