Why U.S. Hospitals Are Closing

Why U.S. Hospitals Are Closing

When we first heard that Mercy
had decided to close this hospital permanently, the community was in
a state of shock. Anger. Disappointment. We thought it would always be here. When bad things happen in our
lives we like to blame people. And there was a
lot of finger pointing. In rural towns across the U.S. hospitals are in crisis. Since 2010, 121 rural
hospitals have closed. And the National Rural Health Association
says more than one-third of all rural hospitals in the U.S. are at serious risk
of shutting down. And it’s not just rural hospitals
that are going out of business. Several hospitals in urban areas
including Phoenix and Chicago have shut down. One recent high profile
closure was in the heart of Philadelphia. Hahnemann Hospital was a
496-bed hospital considered by many to be a lifeline
for the city’s neediest. But in September 2019 it shut its
doors as it struggled with monthly losses of $3 to $5
million, according to news reports. The closure of the hospital
was pretty upsetting, was pretty heartbreaking for I think
everybody who worked there. But not all U.S.
hospitals are suffering. Since the 1990’s, a series of
mergers and acquisitions have created mammoth hospital groups. Many of these hospital consortiums
are turning huge profits every year by offering high priced
services like cardiac and orthopedic care to well insured patients. So why is it that some U.S. hospitals are making billions while hundreds
of others are going out of business? Hospitals in the U.S. got their start in
the mid-18th century. Before, if a person got sick, a
doctor would come to your home and treat your illness – for a fee. Poor sick people often
found shelter in almshouses. Charitable organizations that
housed the destitute. But things changed in 1736 when
two the oldest hospitals in North America opened. The charity hospital opened its doors in
the colony of New Orleans – the same year New York’s
Bellevue Hospital began operations. Early h ospitals were really
welfare institutions, not particularly clean places. Infection was rampant and they were
really the houses of the last resort. But it wasn’t until after
the Civil War that hospitals really took off in the U.S. With advances in medicine and
more people moving into cities, churches as well as local
governments started to build hospitals across the country. In 1873, there
were 178 hospitals in the U.S. By 1909, there were
more than 4,000. By the 1920s and 30s, hospitals
are pretty much having to start charging patients. Most of these systems were in
place that formed the modern hospital. We had laboratories, machines that
could do blood work. Hospital construction picked up after
the Hill-Burton Act passed in 1946. The federal law gave out $3.7 billion over the span of 30
years for hospital expansion across the U.S. The passage of government
funded medical insurance program Medicare in 1965 injected even more
cash to build more hospitals. By 1975, there were about
6,000 hospitals in the U.S. But in the mid-1970s
hospitals started to close. Analysts say, that had a lot
to do with advancements in technology procedures that previously required
hospitalization didn’t anymore. Mergers were another factor for driving
down the total number of hospitals in the U.S. Rising health care costs starting in
the 80s pressed hospitals to team up to survive. The first wave actually started
in the mid 1990’s. Then it took a pause and then
we saw mergers and acquisitions come back with great velocity in the mid 2000s. Between 2008 and 2014, there were
more than 750 hospital acquisitions and mergers in the U.S. And that trend has
continued to today. By 2018, the most recent year
this data was available, there were over 5,000 hospitals in the U.S. an 11 percent drop from 1975. There are thousands of hospitals, big
and small, but about 5,000 are considered acute care hospitals where you
go for short term care and urgent medical treatment. For the purpose of this video we’re
just going to focus on this type of hospital. Every hospital has its own
model for how it brings in cash. Revenue is also dependent on
a whole lot of factors, including the type of insurance a patient
has and the medical and surgical services offered by the hospital. Hospitals can also make money
from graduate medical training subsidized by Medicare, investments on
endowments and money from donors. But generally speaking, the bulk
sum of hospital income comes from commercial payers like private
health insurance and government payers like Medicare, which is typically
for people aged 65 and older and Medicaid, which is for
people with a low income. Hospitals prefer patients with private
health insurance because that insurance pays the best. Medicaid pays the least. Here’s how it works in practice. The Mayo Clinic is a non-profit
academic health care system with hospitals in Minnesota, Arizona,
Florida, Iowa and Wisconsin. The Mayo Clinic had
revenue of $12.6 billion in 2013. Almost 85 percent of that money
came from medical service revenue, which includes all the cash a
hospital gets for patient treatment. Four percent came from grants and
contracts, three percent came from investment returns and the remainder from
a mix of other smaller sources. Let’s take a closer look at
some of these sources of income. Medical service revenue at the
Mayo Clinic was $10.6 billion dollars in 2018. Fifty nine percent of that cash
came from contracted health insurance plans, 24 percent came from
Medicare, 14 percent came from non-contracted health insurance plans and
self-pay and three percent came from Medicaid. According to analysts,
a hospitals location is a big indicator of the type of
insurance a patient will have. People living in wealthy areas tend
to have private health insurance. By and large, one of the greatest
predictors of how much money a hospital makes is how wealthy the
community is in which they are located. Hospitals in wealthy communities often
raise a lot of money in philanthropy and have
well insured patients. Hospitals that are predominantly taking
care of government insured patients or poor patients
tend to struggle. For some hospitals the self-pay category
is a real game changer for profits. In 2018, the
Mayo Clinic treated 1.3 million people from 138 countries. A large internationally known clinic like
the Mayo Clinic is still going to depend on payer mix but
they’re also going to try to attract a lot of international patients, many of
whom, if they can travel to the United States, they probably have a
lot of money to burn on their health care. Medical and surgical specialties
can also really boost a hospital’s bottom line. One well-known way in which hospitals can
generate a lot of money is to either pivot to or grow
high-ticket services like spine surgery, cancer care, cardiac surgery. That’s a major source of income for
a lot of hospitals, not just the high-end hospitals a lot of community
hospitals have got in on the act. But perhaps the most effective
way hospitals can drum up more cash – raising prices. Analysts say, that’s one of the
reasons driving all mergers and consolidation across U.S. hospitals. As hospitals grow by
acquiring other hospitals and jacking up prices, they get more
leverage in negotiating insurance contracts so they can command higher prices. The bigger you are, the more power
you have in the business world. Hospitals have begun acquiring
others, developing regional systems. We’re seeing city after city consolidate
into a few major systems. Massachusetts General, a nonprofit
affiliated with Harvard Medical School, is a member
of Partners HealthCare. A health system that is made up
of about 15 hospitals and medical centers. Analysts say that Partners
HealthCare’s high prices are a result of the medical
groups market dominance. A Massachusetts state agency report
in February 2016 claimed Partners Health Care was the only health care
system in the state where all of its hospitals had higher prices
than the state median. In 2018, Partners had
operating revenue of $13.3 billion. That same year New
York and Presbyterian Hospital’s operating revenue was $8.4 billion. Partners HealthCare, which includes
the Massachusetts General Hospital and the Brigham and
Women’s Hospital, has massive market domination in the Boston region. It’s probably one of the reasons
why they also have extremely high prices for patients
and insurance companies. CNBC reached out to Partners HealthCare,
but they did not provide a comment for this story. After 20 or 30 years of consolidation,
we’ve ended up at a point where broadly 20 percent of hospitals in
the US are in what is essentially monopoly markets. But while some hospitals are seeing
big revenue gains, many rural facilities across the U.S. are facing a grim future. According to the National Rural
Health Association, almost 700 rural hospitals are in danger
of shutting down. Just take Mercy Hospital Fort Scott,
a nonprofit 46-bed facility in southeast Kansas. After 130 years, the hospital didn’t
have enough money to keep going. For the community the
news was crushing. When we got the announcement that
the hospital was closing, myself and my wife, we were devastated. We’re like, okay, well, that’s
the worst thing we’ve heard. The community took it hard as well. The CEO would get death threats
even though it wasn’t her fault. The grounds of the abandoned hospital are
now home to a small clinic and emergency department. For over a century, Mercy Hospital
Fort Scott served not only the town, a rural community, of farming,
ranching and light industry, but the surrounding Bourbon County
area as well. Bourbon County has a
population of about 15,000. About 10 percent of people in
the county lack health insurance and one in four children
lives in poverty. In its heyday, the hospital
was probably the community’s biggest employer. They had five
or six hundred employees. We did a lot of surgeries. We attracted people from 50, 60,
70, 80, 100 miles away. A smaller number of reimbursements starting
in 2013 from private and government insurance programs meant less
money was coming in. And like a lot of struggling
hospitals, the patients coming to Mercy Hospital, Fort Scott had
little or no insurance. The clinic part was doing OK. But when you’re losing 90 percent or
almost all of your money because you’re not keeping the beds full. That’s a real problem and
it’s a very expensive problem. Dr. G ugnani started working at Mercy
in 2004 and now works in the clinic run by the Community
Health Center of Southeast Kansas. I’ll see anywhere between 25 to 30 people
a day and it can vary from just simple cough and cold to
they got diagnosed with cancer they want to make sure that
their meds are right. I had to go to the ER the
other day. What were you allergic to? What did you get into?
I have no idea. My arms are red and
broke out in hives and my face was swelled up. Say ah . Your throat looks pretty good. You know,
the bad part is I don’t know what caused it. According to Dr. G ugnani, some
elderly patients have left Fort Scott to be closer to other
hospitals, including roughly 80 oncology patients who had to
find care elsewhere. Probably as recently as five years ago
t here were maybe as many as 200 babies born here a year. Now those babies are
being born elsewhere. But if it’s not a hospital, what
you rural towns like Fort Scott need? This hospital was built
to last 100 years. It’s 20 years old now. We certainly didn’t need all
the beds that we had. Honestly, I think you
still need hospitals. You may not need a 40-bed hospital, but
I do think you need a smaller version of that. For decades, Hahnemann University Hospital in
Philadelphia was a lifeline for the city’s poor. Being a large safety net hospital
next to a poor inner city neighborhood meant it cared for
patients regardless of their ability to pay. But with financial problems
that started in the 1990’s the hospital had been in
failing health for years. In 2018, the money losing facility
was bought by American Academic Health System, a for-profit company
led by Joel Freedman, an investment banker from California. Less than two years after the
purchase, with reported losses of more than $3 million a month American
academic health system closed the hospital. When I heard Honeyman was
closing, I didn’t believe it. I think most people in the hospital
were probably in some sort of denial. It was extremely abrupt. Almost overnight, residents were left
without a nearby facility, without a nearby emergency room. Twenty seven hundred employees
lost their jobs. And Hahnemann was not alone. Since 1977, Philadelphia has seen
nearly 20 hospitals close. Many located near
low income neighborhoods. In 2016, the city’s poverty rate
was more than 25 percent, with nearly 200,000 people living in deep
poverty, according to a study by The Pew Charitable Trusts. Like a lot of hospitals, Hahnemann’s payor
mix was one of its biggest problems. We have a lot of
patients of low socioeconomic class that don’t have the means to get
private insurance and will rely on government funded insurance. Many other patients are uninsured. The patients who live near
Hahnemann do have other options. The real issue is the emergencies. Where do you go in
the middle of the night? But what outraged many
in the community? The owners place the land beneath
the hospital in a separate company that was not included
in the bankruptcy filing. Everyone from nurses unions to
city officials began speculating that Hahnemann’s owners may not have intended
to save the hospital, but instead planned to sell the
land to property developers. The hospital’s location near City
Hall makes the land extremely valuable for condominiums or
a high end hotel. There were a lot of suspicions
that the interest in the purchase wasn’t to serve the community. It was more to close the hospital. Develop the land from there. The land itself is probably worth
around $50 million dollars, but its prime building territory. Others fear that if the plan succeeds,
it could be a blueprint for private equity firms to buy and
close other hospitals across the U.S. This is a model that we’ve seen
in the retail sector where the big legacy department stores can
no longer operate. The stores go bankrupt and close
and the real estate becomes tremendously valuable for
commercial development. CNBC reached out to American Academic
Health System, but they did not provide a comment for this story. With some rural and community
hospitals on the decline. Where do hospitals go from here? What should we expect
from our local hospital? Should we have a local hospital? I think 50 or 60 years
ago, every hospital did everything for everyone. I think ultimately that’s just
not what the future looks like. According to analysts, the health
care of tomorrow could be a move away from hospitals as new
technologies drive the shift to outpatient care. Since 2009, there has been a
drop in hospital admissions, according to the American
Hospital Association. Ten years ago, a knee surgery would
have meant spending more than a week in hospital. Today, it’s possible
to go home the same day. Hospitals have increasingly been seeking
the better paying patients. They want people who can
pay on their own. They want people who have good
insurance coverage and they want people who are going to
be treated for profitable conditions. The future looks like a smaller
number of bigger hospitals scattered across the country that are
providing very, very high intensity specialized care. That could mean for rural communities
and people living in lower income areas. Hospitals will be
more difficult to reach and potentially more expensive
to access. Having one less level, one trauma center
in the city is not a good thing. Having less maternity wards
is not a good thing. I think what we forget is the
public good health care provides and we keep thinking of it
as this business.

100 thoughts on “Why U.S. Hospitals Are Closing

  1. I know there not trying to blame anyone, but can we agree it’s those scummy leaders we have who rely on screw over the little people A.K.A…….PEOPLE WHO CAN SAVE YOUR F*****ING LIFE!!!!

  2. I mean, they charge $13 for an ibuprofen and the opiod crisis. What do they expect? Why would anyone trust a system that has to be greedy by nature to survive.

  3. Cue the big string of BRAINWASHED Americans "oh we have the best hospitals in the world and EVERYONE from overseas comes to use our hospitals. Yeah. With surgery over 15 fold the cost. Sure……

  4. Please understand that when u force hospitals to not be able to refuse care to people who cannot pay, and people who abuse the system, someone has to foot the bill, and its usually those who actually pay.

  5. And all these Americans want to swear in a president that prioritizes military spending, so they can off playing war. The current administration wouldn't bother with benign trivial things such as public healthcare…

  6. Because the rich corporations have priced themselves where nobody can afford them. Now they can be eventually poor like everybody else!

  7. Can you get rid of the ridiculous background music? It's an important issue that you talk about but the music is an irritant.

  8. The US health system and, ideology is wrong, so broken and, yet you continue to defend it. Why do those socialist european health systems live on giving out free health care damn it.
    No health system is perfect but, to turn it into a profit maker is delusion. Why can’t the US admit they were wrong and, move on.

  9. Hospital is closed in Philadelphia because of the stupid malpractice laws, there is 100% chance for physician to get malpractice Case in Philadelphia. PA state has no cap, u can sue for 20 billion or whatever u want

  10. That's because Black Op money from the government is flipping billions and they can't help the sick and dying in the country but they'll experiment on the innocent healthy citizens interesting

  11. Government requires Doctors to have malpractice insurance, That is money out of their pocket so they pass it on to patients. Government says they will pay for your medical needs, so Doctors and hospitals raise their rates. Hospitals can’t afford to stay in operation with the pennies and nickels the government gives them so they have to close.

  12. In the middle 80s Medicare reimbursement changed from cost reimbursement to prospective payment – which was devastating to many ,many hospitals. We can thank Ronald Reagan. This was the beginning of the end. Healthcare has been on a steady downward slope since this implementation.

  13. America is so induced in hate & prejudice that they allow the government to manipulate the system & we pay for it a without batting an eye! The defense dpt under Rumsfield admitted to losing 2.3 trillion dollars or it was missing!!!?? Preposterous!! The sheeple are a stray!!

  14. See this is why I stay on the coast of the US. I don’t plan on living in the Midwest due to declining medical capabilities.

  15. Aren't Government Hospitals are free in USA ? Im my country we dont have to pay for doctors its free here in government hospitals just we have to purchase medicines .


  17. America has a serious problem with lawsuits. Everyone is suing doctors and hospitals for easy money. This culture of lawsuits needs to be changed.

  18. There are millions of immigrants in America now that freeload off the healthcare system. That isn’t sustainable for any country especially when the immigrants are having as many babies as they can produce. Citizens can’t pay for it and hospitals can’t either. The result is health care costs rise and hospitals close.

  19. 12:20. Might it have something to do with her morbid obesity?

    Seriously, how are we supposed to get decent healthcare when doctors don't tell it how it is?

  20. If the hospital was not surviving anyways, then buying and selling the land would not have changed anything. It would have closed, one way or another.

    They need to be profitable or at least break regulsrly even to survive, otherwise they will run out of money sooner or later.

  21. Jesus is coming back!!!! Accept him into your heart NOW before it’s to late… Weather you want to believe it or not, you will have to face him, and you will go to one of two places heaven or hell. Jesus Christ is the only way to the father in heaven. These things that’s happening now is NOTHING compared to Gods SOON wrath, and judgement on the whole earth. ABC’s to salvation ADMIT you make mistakes (sinner) BELIEVE Jesus Christ is Lord and SAVIOR (with your heart) CONFESS with your mouth (he is Lord and savior) and you will be saved and raptured when he takes his church home. He’s coming SOONER than most think, we are in the final seconds of the end of days….❤️

  22. Don't go after the Insurance so much as the Healthcare providers. I was being charged for going to my school training room and using the school equipment. The hospital charged the insurance company $100's for Stim and Exercises that they had no involvement in.

  23. Hospitals stopped beings hospitals and became 120 bed motels attached to a surgi-center. If the United states is even to have affordable healthcare, between 1,000 and 2,000 hospitals need to close. Hospitals are just one piece of the puzzle.

  24. Communities exist for ECONOMIC reasons. Job growth is in urban areas. Just as people migrated to rural areas from urban areas for the money, today the jobs are in urban locations. Domestic migration is perfectly normal and has happened in the US more than once. Migration to cities during the Industrial Revolution, again in the migration of African-Americans from the South to follow industry, and today seeking jobs in the exploding technology industry are perfectly normal disruptive change. Always plan to be mobile because the world isn't static and the US isn't ancient Egypt where not much changes for hundreds of years.. America is too large to have every convenience in every location. The only reason rural America was viable is because farming used to be labor intensive. Adapt or relocate. Nobody wants to hear the truth but the smart folks left that sinking ship long ago (the Census proves it). Understand what you cannot have, and what you cannot have is jobs for everyone everywhere they wish to have them.

  25. The problem is that there are too many thieves and too many parasites in society that steal from hospitals, either directly by not paying the bill for the services that they received or indirectly through frivolous lawsuits.

  26. With system actually works to perfection in the United States?

    O yes….

    Manipulating or try manipulating all the world.

  27. Weird format for this segment. Sounds like an infomercial for a pyramid scheme. Thought it might have something interesting but nah CBS sucks

  28. It's basically the rich and powerful screwed the middle and lower and surprisingly, those middle and lower, are happily supporting the rich and powerful, all in the name of "freedom" and "capitalism".

  29. Hahnemann had a banker take over. They had to know his prime concern was money not people. He couldn’t care any less about sick and poor people. His care was geared towards the bottom line!

  30. The US government has never properly been interested in providing good health services to its citizens, yet you like to label your country great. The rest of the world laughs at you.

  31. And that is while War Prone Arrogant America spends billions fighting unnecessary wars and spending billions building weapons to bully adversaries all over the planet or fight fantom enemies created by America's own need to justify such immense waste of money with the 1% mega rich of the American weapons industry!
    It just cannot end well!

  32. There are many things that is ok be private: insurance, energy, roads, trains, etc. healthcare is definitely not one of them. In France private insurance costs around 30 usd per month and that’s on top of universal health care which is free (tax payed)

  33. That said, people do need to take better care of themselves. Our country is riddled with diseases from lifestyle choice's. Cigarettes, alcohol, sugars, stress. These are all detrimental to human beings. Study after study shows how these and many things we do to ourselves are killing us in a time when we, as a species should be living longer and healthier. But we are not perfect. Most of us have hereditary concerns and ignore them and do what we want anyway. Spinning the roulette table and hoping for the best. We all know someone that has died from alcohol, cigarettes and drugs. We know the consequences of these things. Being a doctor, and hoping a patient does right afterwards is a gamble. They can only tell people what they should do, but people are rebellious in nature, often becoming their own worst enemy. Why go to the doctor if you won't follow through? Maybe their thoughts are if you pay more for your healthcare, you will take better care of yourself. Poor people do have a tendency to have bad diet's, stress, smoker's, drinkers, reckless, depressed etc. Creating a sick workforce because they can't afford to pay for healthcare but ultimately because they have been raised in that environment and don't know anything else.

  34. Because a huge amount of Americans can't afford medical cover rip off America doesn't even look after its own citizens declining America good riddance


  36. Probably because no one can afford to go to the doctor anymore. People can barely afford a roof over their head in this country.

  37. Facing our personal health issues alone is now less daunting than seeking treatment in what has become a rapacious for profit system like any other. The whole discussion of making money should not even come into healthcare, education or public utilities.

  38. I’m American, born and raised here.
    The single largest embarrassment for us is our healthcare system.
    Single payer WILL be instituted eventually because the current system is not sustainable.
    For profit healthcare is disgusting and has been a huge black eye for this country.


  40. Dude I didn’t have insurance I went to the ER and the doctor looked at it and said we can’t do anything I have to pay the hospital 175.00 I just got the doctors bill 871.00 my jaw dropped

  41. Interesting. Medical bills and patient demands are soaring like never ever before and hospital are closing? What happen to the law of supply and demand?

    Someone is constricting the supply on purpose just to drive up profits. Haha not conspiracy just the truth.

  42. Atlanta saved grady hosptial it was ready to close years ago but managed to find funds from many different places. One way the hospitals here are saving themselves is to “rent” out units to companies like select medical, kaiser permanente and they use their own doctors but the use the hospital nurses and other employees. It can be confusing to work in those units. I’ve tried.

  43. This is the war on poverty . The thing is it's a war on the poor , without the dirty poor people there is no poverty , just why in the hell would these unstable people choose to be such dirty poor scum on the bottom of our shoes , if we had all wealthy healthy people the country would look so much better , come on this is the common sense they talk about right ? If we close all the hospitals for the poor then they will die and we can have a pure and clean nation once again , right ? Those damned poor people cost us so much they really are the bad guys and thieves here , unlike the good wealthy folks like Martin Shkreli . Keep up the good work for sure , you gave us cheap guns and even then we didn't know what to do with them , but I think closing the services for the poor will do the trick , no ? You are Asleep it's a nightmare , " WAKE UP ! "

Leave a Reply

Your email address will not be published. Required fields are marked *