Doc: Large hospital profits a danger to the industry

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A retired cardiologist sees hospital profits as a major driver of healthcare expenses across the board, and as an impediment to effective physician recruitment.

In a commentary published by the American Journal of Medicine, Robert M. Doroghazi, M.D., writes that the latest trends are discouraging the best and the brightest from entering medicine. These issues range from changing certification processes to medical student debt loads.

But he says there is also a less-intuitive factor to the mix: hospital profits. “I believe current hospital competition has done nothing but drive up costs,” he writes. In his view, for-profit hospitals have led the way in the search for margins by targeting their services toward patients with the capability to pay and raising the prices for those services.

By 2013, Doroghazi notes, not-for-profit hospitals occupied seven slots among the top 10 most-profitable institutions. Executive pay has also risen among non-profit healthcare groups, which Doroghzai says amounts to healthcare executives rerouting tax-exempt savings for their personal gain.

With healthcare costs in the United States higher than any other country in the world and rising faster than inflation, Doroghazi wonders whether it even makes sense to operate a hospital in order to generate profits, since hospitals wind up competing with one another to bring in high-margin patients and minimizing services that would help patients without the means to pay.

The annual profit at a hospital such as Stanford could send all its medical students to school for free over the next 10 years, according to Doroghazi, which he argues would be of greater benefit to doctors, patients and healthcare organizations alike.