Bill Schubart: Keep private investors away from nonprofits in healthcare, journalism, corrections Leave a Comment / Health / By admin The incursion of private equity investors into non-profit healthcare, journalism and corrections is causing untold social and economic damage in the service of high-velocity profit. Private equity investors, usually limited partnerships, look for the right mix of equity and debt and typically buy and restructure companies that aren’t publicly traded. With few regulatory barriers or constraints, they are increasingly seeking opportunities in the nonprofit sector, which offers them the opportunity to garner monetary value from taxpayer-funded government resources such as Medicare, Medicaid, and Social Security. Vermont (and the nation) has three economic sectors: The for-profit sector for companies looking for opportunities and profit. The non-profit sector promotes social mission work. The “for the people, by the people” sector of government, which oversees and finances with taxpayer dollars traditional government institutions such as public education, a postal system, broadcast spectrum, transportation infrastructure, criminal justice, environmental, fair trade, welfare, food systems and more. In healthcare Due to a long-standing ambiguity about whether healthcare in Vermont is a business or a public good, we are increasingly seeing the damage wrought by private equity buying in residential care facilities – many of which are in largely funded by insurers and federal agencies – and by acquiring Medicare Advantage insurance plans and then changing premium costs, rates, and coverage to increase profits. While most federally qualified hospitals and health care centers are legally non-profit in Vermont, to the extent hospitals have been regulated, they are virtually free to operate as businesses. Budgets, rate approvals, and “public good certificates” were not issued with respect to a articulated “population health” goal in Vermont. Weill Cornell Medicine recently released its findings that private equity ownership of nursing homes is linked to lower quality of care and consequently higher Medicare costs: “Nursing homes acquired by private equity firms have seen increased emergency room visits and hospitalizations among long-term residents and increased Medicare costs, according to a new study by Weill Cornell Medicine researchers. The findings, published Nov. 19 in the JAMA Health Forum, suggest that quality of care declined as private equity firms bought out the facilities. “Our findings indicate that facilities owned by private equity firms offer lower-quality long-term care,” said Dr. Mark Unruh, associate professor of population health sciences at Weill Cornell Medicine. “These residents are among the most vulnerable in our healthcare system, and the lack of transparency in ownership makes it difficult to identify facilities with private equity ownership, which consumers may be interested in learning about.” Kaiser Health News also recently reported on a new phenomenon called “patient financing,” an emerging business in which private equity and banks finance medical bills that families can’t afford to pay. “As Americans become overwhelmed with medical bills, patient financing is now a multibillion-dollar business, with private equity and big banks lining up to cash in when patients and their families can’t pay for care. According to an estimate by research firm IBISWorld, profit margins exceed 29% in the patient financing sector, seven times what is considered a solid hospital margin. Hospitals and other providers, who historically put their patients into interest-free payment plans, have welcomed the financing, signing contracts with lenders and enrolling patients in financing plans with rosy promises of affordable bills and easy payments. Started by Dame Cicely Saunders in London in 1967, the modern hospice movement began as a social mission to enable a dignified and supportive end of life experience. It has long been a staple of any healthcare system, and existed in Vermont as an independent nonprofit, the Visiting Nurse Association, until it was absorbed into the UVM Health Network in 2017. for people with mobility impairments. Nationwide, hospice has grown into a multibillion-dollar business, as The New Yorker magazine recently reported: “How Hospice Became a For-profit Hustle. “It started as a visionary idea: that patients could die with dignity at home. It is now a twenty-two billion dollar industry plagued by exploitation. Healthcare news is similarly loaded with the negative impacts of private equity investments in healthcare. National Public Radio recently reported, “Just-released federal audits reveal widespread overcharges and other mispayments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000 per patient annually in average”. The ambiguity about whether healthcare in Vermont is a business or a mission-oriented enterprise has made it ripe for choice by private equity investors seeking short-term profits. The foundation of non-profit entities is social mission, not profit. When private equity acquires a stake in a social service entity, profit and mission goals collide. In journalism Unlike in health care, where the goal is to wring quick profits from the taxpayer-supported resources of federal programs supporting health care — or, as a cynical friend put it, “suck the federal bosom” — goals in journalism they are a mixture of profit, where available, and politics. Of the two, I would suggest that right-wing political goals are more the motivating factor. There is reason enough to worry about private equity and giant media companies hogging local and hyperlocal print and broadcast news. The goal appears to be to squeeze the costs of publishing and local infrastructure and then feed syndicated content into what’s left. Sinclair Broadcasting and Gray Television are two of several conservative companies taking over struggling local media companies. In the corporate sector, the free market incentive to profit reigns and will continue to reign. But it is within our power to limit what they do in the nonprofit sector, and we should if we are to preserve the concept of the social welfare investing mission, especially given the rise of conservative rhetoric. “We will see more attacks on public institutions: libraries, universities, school boards, news organizations. They will be difficult to analyze and difficult to think of as connected. —Melody Kramer, Nieman Labs. The steady decline of local newsprint and television organizations is a major threat to democracy in and of itself, as I wrote. Whereas the emergence of non-profit journalism is on a positive note these days and private equity shouldn’t be allowed to co-opt it. In fixes The criminal justice system, from courts to corrections, is a primary responsibility of government. But even here the business camel’s nose has long been under the tent, sniffing out the profits of a taxpayer-funded system. GEO Group, with revenues of $616 million and net income of $38 million, and CoreCivic, with revenues of $465 million and net income of $68 million, have thrived on government contracts to host the inmates, including Vermont. The Vermont Department of Corrections contracted with CoreCivic to house approximately 145 Vermont inmates at the Tallahatchie County Correctional Facility located in Tutwiler, Mississippi, at a lower cost than if the prisoners were housed in Vermont. President Biden has promised to close private federal prisons in 2021, but has been unable to deliver on his promise. One new and corrosive element we don’t have in Vermont are “porter prisons,” private prisons for elite criminals that offer a high level of daily service, individual meals, Wi-Fi, family visits, etc., all at costing the incarcerated person about $130 a day. However, it is entirely appropriate that the government sector allows and welcomes partnerships in for-profit and non-profit communities when they contribute to lower incarceration and recidivism rates, as with many workplace internships and placements. Vermont’s nonprofit sector is rich in educational and social opportunities within prisons, such as Writing Inside, Children’s Literacy Foundation, Liberal Arts In Prison, Mercy Connections Mentoring, Step Out VT, and Community College of Vermont classes. They are all vibrant examples of productive partnerships between the nonprofit sector and a government institution. As famed Vermont poet Robert Frost said in his poem “Mending Wall,” “good fences make good neighbors.” If we are to preserve and sustain the different goals of our three sectors – business, mission and government – we must be clear about the boundaries of each. We need to properly regulate and tax the corporate sector to support government institutions. We need to be clear about what business is and what a mission-oriented non-profit enterprise is. And we need to set clear boundaries. To that end, I would propose in the next two years that the Vermont Legislature pass the following law: “Act XXX will prohibit private equity investments in non-profit Vermont health care, journalism and corrections businesses. Nothing in the law should be construed to limit foundation grants, partnerships, or philanthropy related to business community programs. Did you miss the latest scoop? Sign up for the Final Reading for a roundup of the day’s news in the Legislature. Related Post navigation ← Previous PostNext Post → Leave a Comment Cancel ReplyYour email address will not be published. Required fields are marked *Type here..Name* Email* Website Save my name, email, and website in this browser for the next time I comment.
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