The Changing Face of Health Care:

How Profits are Driving Health Care Consolidation and Construction

Construction Focused on Profits

Concern has been raised in several legislative hearings this session in St. Paul that the current
reimbursement encourages growth in some areas
of health care to the detriment of putting resources into other equally as important but not as profitable services. The table below provides a partial listing of services and their relative profitability.

Relatively Profitable        Relatively Unprofitable
Angioplasty                         AIDS services
Birthing Rooms                   Burn treatment
Cardiac Cath lab                Psychiatric Services (child and adult)
CT scanner                         Emergency Room
MRI                                      Obstetrics
Open heart surgery          Trauma Center
Orthopedic surgery
PET scans
Sports Medicine
Women’s Centers

_{Source: Horwitz (2005) “Making Profits and Providing care: Comparing Nonprofit, For-Profit and Government Hospitals” Health Affairs 24(3):790}

Now think about what services your hospital has been investing in these past years, and you’ll see a pattern. Investments move towards those services that get paid more, but not necessarily the services that a community really needs.

Consolidation Focused on Profits

The managed care environment has created pressures that have caused Twin Cities hospitals to consolidate into corporate care systems to achieve efficiencies—resulting in the formation of several large health care systems and ending the era of community hospitals. In 1976, there were 35 independent hospitals with about 10,000 acute care beds in the metropolitan area. In the 1980s, the metropolitan hospitals underwent a series of mergers forming the predecessors of the major multi-hospital systems that dominate the market today—Allina Hospitals and Clinic, Fairview System, HealthEast, Inc., Children’s Health Care, North Memorial and Park Nicollet Health Service.

Our current health care system has created a vicious cycle that has forced our employers to look for any way to cut costs, regardless of its impact on patients or workers. It’s time to start building a health care system that works for all.