A Nov. 30, 2023, essay in The New York Times titled “Why Are Nonprofit Hospitals Focused More on Dollars Than Patients?” raised several eye-opening points about how it appears some nonprofit hospitals may be straying from a focus on patients to a focus on profits.
Amol Navathe, MD, a practicing physician, senior fellow at the Leonard Davis Institute of Health Economics, and co-director of the Healthcare Transformation Institute at the University of Pennsylvania, writes about detailed media reports showing some hospitals “hounding poor patients for money, cutting nurse staffing too aggressively and giving preferential treatment to the rich over the poor.”
Dr. Navathe notes that some “nonprofit executives have embarked on an acquisition spree, assembling huge systems of hospitals and physician practices to raise prices and increase profits.” He adds that significant evidence shows development of these “giant systems” is resulting in healthcare that is less affordable for those who need it most.
He also acknowledges that nonprofit hospitals can make money. Hospital operating margins, however, have traditionally hovered between 1% and 2%. Kaufman Hall’s National Hospital Flash Report released this February shows operating margins for all hospitals the past 12 months reaching or breaking 2% just three times, with February 2023 at -0.4% and January 2024 seeing a bump to 5.1%.
In return for being tax exempt under the IRS, these hospitals are required to invest that money back into their communities by lowering healthcare costs, providing community health services, conducting research and offering free care to those in their communities who cannot afford it.
Tax-exempt hospitals provided nearly $130 billion in total benefits to their communities in 2020 alone—the most recent year for which comprehensive data is available, according to the American Hospital Association. Although Navathe focuses his attention on nonprofit hospitals, his recommendations—and those here—also apply to investor-owned hospitals and systems. Following is a handful of suggestions, which executives can consider adopting as an ethical imperative to help reinforce their focus on prioritizing service to their communities over profits.
Most of the recommendations include examples of organizations that have accomplished impressive results. Successfully adopting these suggestions requires the active involvement of hospital and health system governing bodies and senior management.
Tie Executive Compensation to Organizational Mission
As noted in Navathe’s essay, a 2017 ACHE survey (“Chief Executive Employment Contracts and Performance Evaluations: Current Practices”) found that only one-quarter of nonprofit hospitals tied chief executives’ bonuses to their organizations’ community service efforts.
Tying at least a portion of executive compensation to meeting the organization’s mission—not solely financial goals—is a good way to keep this mission top of leaders’ minds.
Address Social Determinants of Health
If improvement in community health status were included as a metric for today’s healthcare organizations, it is more likely that addressing social determinants of health would have high priority. Excellent examples exist in the field, and several healthcare organizations have been cited for their innovative efforts in this area. The American Hospital Association’s May 8, 2023, “Chair File: Highlighting the Extraordinary Work of Hospitals and Health Systems” highlighted two such examples. Guadalupe County Hospital in eastern New Mexico was acknowledged for setting up school-based health clinics to offer preventive care for students. The clinics increased access to healthcare services for children and their families in remote rural areas. Norman Regional Health System in central Oklahoma was recognized for improving community health through a food pharmacy, community health navigator program and community call center and through administration of flu and COVID-19 vaccines.
Target Hospital-Acquired Infections
Hospital-acquired infections affect one of every 31 patients and cause 72,000 deaths annually, according to a 2022 report from the Centers for Disease Control and Prevention. No one would insinuate that hospitals are oblivious to this issue, but it should be included on organizations’ performance dashboards. In its “National HAI Targets & Metrics,” published Sept. 2, 2021, the U.S. Department of Health and Human Services cited progress in reducing the six most common infections between 2015 and 2021. More work, however, needs to be done. According to recent HHS data, Medicare patients suffer an adverse event in one out of four hospitalizations. One-third of those adverse events are serious, including catastrophic outcomes. Therefore, it is certainly reasonable that every hospital should be tracking and reducing these adverse events.
Reduce Racial and Ethnic Inequities
Substantially reducing racial and ethnic inequities is still a massive challenge, but meaningful advancements have also been made in this area. More hospitals and health systems, for example, are being recognized by the AHA’s Equity of Care awards. Bloomington, Minn.-based HealthPartners has been stratifying its patients’ experiences and outcomes by race and ethnicity for more than 15 years.
Kaiser Permanente has experienced notable success in improving control of chronic conditions among minority patients. The work of Point32Health has established more than 70 ongoing health equity initiatives in collaboration with Harvard Pilgrim Health Care and the Tufts Health Plan, which together involve 2 million members. Reducing racial and ethnic inequities will require documenting such disparities; therefore, hospitals and health systems should consider partnering with local health departments and collaborating with other hospitals in the same service area to accelerate progress.
Take Care of Caregivers
Professional burnout among clinicians has become ubiquitous, leading to clinical errors, moral distress and early retirement. Executives should continue to focus on prevention and mitigation of burnout among their front-line staff. The insights provided in “Battling Clinician Burnout: Fighting the Epidemic From Within,” appearing in the January/February 2019 issue of Healthcare Executive, are a helpful resource. Achieving and maintaining excellent nurse and physician satisfaction survey results is a reasonable indicator of how an organization stands regarding burnout rates among its staff.
Keep Employees Safe
Closely associated with the goal of reducing burnout is preventing violence against staff members. Healthcare workers in the U.S. suffer more nonfatal injuries from workplace violence than workers in any other profession, including law enforcement, according to August 2023 reporting by the Associated Press.
Consequently, reduction in workplace violence is a valid performance metric and one that should be emphasized in today’s healthcare provider organizations. An April 2023 AHA issue brief titled “Building a Safe Workplace and Community: Mitigating the Risk of Violence” included a case study of the NewYork-Presbyterian Health System’s efforts to prevent and mitigate workplace violence. The same issue reported on how Connecticut-based Bristol Health greatly reduced violent incidents within three years and the steps taken by Atlanta-based Grady Health to train all staff in de-escalation, self-defense and response to emergency codes.
Help Reduce Medical Debt
Nearly one in 10 adults has medical debt, according to a March 2022 KFF analysis. Patients delaying treatment because of medical debt remains a significant problem, frequently resulting in patients needing more expensive treatment when they go to the ED or require hospitalization. To help reduce this serious issue, more hospitals are now operating mobile clinics. Examples of two such organizations include The Mayo Clinic Health System and Providence Santa Rosa Memorial Hospital, which provides medical care for the uninsured and under-insured population in Sonoma County, Calif.
The value of encouraging governing bodies and senior management to include documentation of current, expanding or new programs reflecting this type of community benefit on their dashboards is obvious.
Admittedly, some health systems and hospitals may not choose to follow all these recommendations. Even adopting some of them, however, can and should influence institutional performance. And they should certainly serve as a good reminder to keep hospitals’ focus where it needs to be—on prioritizing patient care above all else.
Paul B. Hofmann, DrPH, LFACHE, is president of the Hofmann Healthcare Group, Moraga, Calif., and co-editor of Managing Healthcare Ethically: An Executive’s Guide, published by Health Administration Press, and Management Mistakes in Healthcare, published by Cambridge University Press (hofmann@hofmannhealth.com).