Playing The Heart Strings
While Remaining Evasive On Plans
After attending the public Lee Health meeting at Lakes Regional Library Jan, 8th, I wanted to report the message I kept hearing from the board and administration of Lee Health. The heart strings were strummed because Lee kept emphasizing their goal of maintaining a safety net for the community. Lee Health’s safety net responsibility has been the primary excuse for the original enabling act that paved the way for Lee Health becoming a special district hospital system. Recall: “In 1968, Lee Health began operating as an independent special healthcare district created by the Florida Legislature and governed by an elected Board of Directors”.
In a rather confounding and contradictory logic, the public is being told that in order for Lee to provide this safety net, administration (and perhaps some on the board) feel they must remove their publicly voted hospital board of governance and dissolve the district. Not really discussing ALL the business and strategy options if dissolving is done, they focused everyone’s eyes on their present goal of wanting to become a private, non-profit entity going forward.
Their logic goes as follows:
Coming competition is assumed to be for profit.
Based upon the nature of for-profit, new health care competition will cherry pick higher paying business and leave Lee (as chartered) with less profitable patients AND all charity responsibility.
Lee MUST maintain control of the community health care resources (try to maintain market advantage).
Conclude: Lee must grow business outside of the area in order to continue the control they MUST maintain. After all- they have enjoyed a monopoly position AND benefited from the non-profit public district model for essentially 25 years.
To wit I ask myself: How does moving/extending capital resources outside of the community improve Lee’s safety net/capital reserves? It appears the justification for securing this community’s “safety net” is to go to other communities and cherry pick paying business. Ergo - isn’t that the same business model they deem to be the “evil” they are trying to confront? It appears that Lee Health’s administration is convinced that non-profit status warms the publics heart strings, maintaining that cozy and fuzzy feeling.
Which Leads Me To Consider AND Speculate
It appears clear the present powers that be have concluded non-profit status remains the preferable model for Lee Health. This makes sense from the fiduciary part of the ledger.
As I understand it, IF a non-profit entity dissolves, assets can be transferred to another non-profit OR assets must be equally distributed to the entities shareholders. How in the world do you return Lee’s accumulated assets equally to all the citizens in the district? Certainly it would be very “clean” to create OR transfer present assets to a new/different non-profit. Administration is telegraphing their strategic desire to unshackle themselves from the special district rules in order to allow them to move resources and compete for health care business outside their present boundaries. By dissolving the charter they also get to rid themselves of a publicly voted supervisory board and open the path of private planning and governance.
Further, it is a marketing advantage to citizens to claim non-profit status as a hospital. Certainly in this day and age, most economically illiterate people assume running a business for profit is evil. Consider all the malfeasance politicians like Bernie Sanders and Elizabeth Warren and other socialist wonks attach to corporate for profit entities. They accuse profit motive for the blame of society’s innumerable problems. Add to the marketing formula, a majority incorrectly believe that health care is a right, like free speech. So heaven forbid, you offer a for-profit hospital to the community.
It is very helpful to have a non-profit business status. My lord, you can accept charity, avoid paying real estate taxes, accept a volunteer workforce and get financial payment from government funding. You can harness additional non-profit foundations to be used to purchase assets of for-profit businesses, obscuring from the public your entities business dealings. You can also engage in private insurance contracts as well as sell your services for cash. That is a lot to like.
I speculate that IF Lee Health achieves private nonprofit status, it would be very compelling and mutually beneficial to transfer assets to Cleveland Clinic, Cleveland Clinic is itself already a private, non-profit entity. Cleveland Clinic is a national brand well loved by the public and has a huge presence in Florida already. I am not the only person in town discussing this rumor. This might actually be a benefit to the community and potentially a very reasonable path. I don’t know historically how well Cleveland Clinic provides for charity and safety net care.
The actual downside of the current non-profit structure is for the above mentioned benefits, Lee Health has an obligation to provide charitable, community safety net health care. This is the ball and chain Lee wants to be rid of. As I stated in the meeting Lee Administration now wants its cake and to eat it too.
But Hold On and Consider
Being a public chartered district entity implies, in theory, Lee Health’s assets and liabilities are currently the publics’ property. This is a nearly 3 billion dollar a year in revenues conglomerate of Hospitals, surgical centers, mutual ownership arrangements with senior living developments, nursing homes, specialty groups, home health agencies, real estate, and rehabilitation facilities. Lee is exploring taking this out of the public eye and being “blessed” with a move to non-profit status. Such a strategic move has significant ramifications, most notably, how does the organization value and share their massive asset accumulation with the community and geographic district. I would also point out Lee has a mountain of investment assets, interest bearing funds and the ability to seek additional bond funding (that can be backed by value added taxes if called upon).
What if all these accumulated assets net present labilities were put up for sale? I pointed out to our presently public board that as part of this HB 227 enabling act, they have a fiduciary responsibility to consider this scenario as possibly a better outcome for the public than the currently stated preferred plan. Also, what stops the new non-profit from deciding that route in the future, now without the hindrance and consideration of the public?
Imagine The Following Scenario
Imagine Kauffman et al report that the book value of Lee Health’s assets net liabilities (especially if off loaded to the county commissioners) is multiples of their annual revenues. What if a value added tax (the county could potentially require this) was part of the sales process and our public receives a large endowment fund that provides charity for the truly indigent in our community.
Who would buy the assets if offered for sale? Low and behold- PRIVATE BUSINESS including for-profit hospital competitors. Doctor’s presently Lee employed could have the opportunity to repurchase their acquired practices. Colleagues could buy into the currently Lee Health shares of our local outpatient surgical centers.
Is A Free Market, For Profit Health Care System Really Inferior To A Non-profit Model?
At this point the only honest answer is who knows? In my lifetime our country has not experienced a Free Market in health care. The reason is that when brought up as a possible model and goal, various economic, policy analysts and political entities disallow such a consideration as possible. Kind of like nixing Robert Kennedy Jr’s chair at the Democratic Presidential Debate, Free Market Advocates get cut off at the knees.
Here is what we know through direct experience that argues for a private business and free market model for health care.
Open cry pricing provides for true demand signals to suppliers. The market most efficiently provides the goods and services. There is no valid claim that warrants this to not be the case for health care.
All resources are limited and that includes obviously society’s doctors and nurses.
Claiming a right to our work is conscription (a polite word for forced labor). That is agreed by the majority as unethical.
When for profit motive exists due to the incentives, the market gets more value at less cost. Look at your TV’s, automobiles (until the new Electric Vehicle conscription on our automobile industry), oil, natural gas, and pretty much everything that allows price discovery. This evidence is all around us. There is nothing sacred or exceptional about health care either.
On face, do any of my professional colleagues in our community believe the non-profit enabled Lee Health system is a superior hospital system? Wouldn’t it stand to reason that IF assets were sold to private business, including our physician professionals, the the community would be best served? If more entities are competing for your business don’t you think you will have more access and options and downward pressure on the price of our services?
During my entire career, I have seen physicians always collaborating in patient care. Being in separate ownership or smaller in scale did not prevent that from happening. What we witness with the Lee Health’s enabled, single entity community health care system, is a culture of Us vs. Them. In Lee Administration’s eyes and policies, the perception is you are either with them or you are against them.
Historically that is not how hospitals were set up. They were there for both patients and physicians and nurses to access an institution for healing and care. I would ask the board to consider the community’s interests might be better served by promoting more competition. Perhaps rather than trying to over-achieve down a path of larger, regional commitments, maybe Lee continues as the community’s enabled, chartered district. Perhaps upon looking at the scales it turns out its best to actually dissolve the entity and arrange a new health care system in our community- one that allows more competition. Attaching a value added tax to asset sales can provide the community a fund source for true indigent charity for health care.
Its important that everyone who desires to have a vote for the hospital board be able too. If Lee’s going to be a private-for-profit hospital and continue to expand on every corner, maybe they should no longer have a 301c status.