When profit is part of the cure

The COVID-19 pandemic is doing a spectacular job at upending business models. Just ask an airline executive or a CEO of a cruise line, now sitting on multi-billion-dollar fleets of empty assets.

Former money-makers are now tanking — not unexpectedly, with so many people told to stay home.

But, in a situation that might give Canadians another reason to like our medicare system over for-profit models, U.S. hospitals are taking a huge hit, too.

In some ways, for-profit health care is like any other business; some parts of the business make more money than others.

If you run a grocery store, for example, your profits on Kraft Dinner are different than, say specialty cheeses. Your expenses on things like spoilage vary, too.

Hospital corporations in the United States are finding that being really busy with a COVID-19 pandemic is oddly pushing some to the brink of bankruptcy.

Why?

Because the virus isn’t a money maker. And money has to be made.

Providence Health Systems owns 51 hospitals and has treated 1,200 COVID-19 patients — a company spokesman told the New York Times that the company doesn’t know if it will even cover its own costs for that care.

“We have been in this situation much longer, because of Seattle being on the forefront of the pandemic,” Ali Santore, the hospital system’s vice-president for government affairs, told the Times. “We cancelled elective surgeries before there was a government order. We had to see so many patients who required more supplies, isolation and nursing. Our labour costs were through the roof.”

Providence told the Times it lost US$400 million — in April alone.

It’s big hospitals and small ones. The prestigious Mayo Clinic expects to lose US$900 million this year, and the Times also spoke to chief executive Andy Fitzgerald of the 90-bed Campbell County Memorial Hospital in Wyoming.

“The last six weeks have been disastrous for us. … We’ve taken a 50 per cent haircut on our revenue, and it’s the best 50 per cent: elective surgery, radiology, all the outpatient care that pays for the other services we provide,” Fitzgerald told the newspaper.

And that’s the issue: private medical insurers pay top dollar for some procedures, and much less for others. Privately insured patients getting knee replacements are good money; COVID-19 patients in your emergency room, without insurance or in lowerpaying U.S. medicare programs, are a financial drain.

And that’s meant, while scores of Americans need medical treatment for COVID-19 and its effects, April actually saw pay cuts for many U.S. doctors, and more than 1.4 million job losses in the American health-care system alone in April.

Makes you wonder if there are areas where profit shouldn’t be king.