Consumer Health Perspectives Vol. V No. 2 June 1978 (Pub. 6/78)


New York State citizens always had a bizarre attitude towards the power brokers in the state. Wall Street was honored and vilified depending on the mood of the public as reflected in election campaigns. But blood money made at the altar of proprietary hospitals was a guarded secret because consumers had so little information about who owned, ran or controlled hospitals. Previous CCAHS publications listed the names of governing board members of voluntary hospitals and named the physician owners of proprietary hospitals. Each had an impact on those boards and the public.

Many voluntary hospitals seeking to survive the changes in reimbursement while trying to remain true to their mission to provide care to all without regard to the person’s ability to pay. This conflict and reality was taking a toll on many hospitals’ bottom line. The deficits were no longer being underwritten by the affluent board members. They turned to management corporations to take over the running of the hospital. The management fees ran into the millions and most of the start-up fees were paid up front. The managers were mostly from the south or west and their cultural experience with New York was tainted by stereotypes of rich northern Jews and New Yorkers in general. They came with unsophisticated views about New York’s labor management arrangements. They had to show a turn-a-round and soon were dismantling anything and everything within the hospitals they managed that caused a loss for the bottom line. This soon broke out in class discrimination as many African-Americans, Hispanics and other people of color had no insurance or low paying Medicaid. Combined with the distribution of this issue of Health Perspectives and a gathering storm of unionists, community activists and consumers, the politicians had to put back their anti-rich hats. Needless to say, the proprietary corporate management firms soon sought more fertile grounds to feed. As an aside: one of these corporate management firms was created in Nashville by some of the local power elite. A few worked their way into Congress where they extolled the joy and value of proprietary hospitals and management corporations. Over time these companies morphed into wholesalers of hospitals and other institutions buying and selling hospitals as just so many used cars in a lot. Most of the investors overnight made millions and a few billions. Nothing to date shows that their efforts reduced expenses, improved quality or improved outcomes!

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