If you operated a library and no one returned the books, sooner or later you’d be out of business. America’s nonprofit hospitals face a similar problem.
Health insurance giants like Anthem BlueCross, the parent company of New York-based Empire BlueCross, are reporting record profits in the billions, while many nonprofit hospitals across the country are struggling to keep their doors open. Anthem makes its billions by collecting health insurance premiums each month from ratepayers and their employers. But the company isn’t required to reinvest profits back into the local institutions that provide health care. In New York, Empire BlueCross routinely rejects claims for services that hospitals provide, followed by months of negotiations over billing disputes. Over time, the insurance companies usually win by wearing down the hospitals.
South Nassau Communities Hospital has reached an impasse with Empire BlueCross over funding necessary to support quality care, patient safety, and emergency services for patients and their families.
Blue Cross says the impasse is about managing expenses and representing employers’ interests. That might be true, if only Blue Cross weren’t such a big part of the problem. Anthem BlueCross posted another record profit last year, recently announcing a $3.4 billion operating gain for 2017. Why was that profit not reinvested in the community-based institutions that actually provide the health care service? The company also received another $1 billion in the form of a tax cut.
Unlike Blue Cross, South Nassau is a nonprofit corporation anchored in the community. Saying South Nassau is nonprofit doesn’t mean that it isn’t required to operate in the black. We must meet our expenses and be able to pay our nurses, doctors and support staff the competitive wages they deserve. Any “surplus” funds we take in above expenses are poured back into the operation by upgrading medical equipment, modernizing our physical plant or expanding services.
By contrast, for-profit corporations like Blue Cross operate for the benefit of stockholders. They issue dividends and stock buybacks and look to maximize shareholder returns. The profits they make in New York can go anywhere, to anyone, or be invested in anything. If you look closely, Anthem BlueCross makes a significant amount of its profit on financial reserves — accumulated profits, money that is invested and not spent on medical claims. The company routinely denies payment for care after it has been delivered, often placing its judgment ahead of that of the medical professional or the patient in order to fund its reserves.
Nonprofit corporations like South Nassau, on the other hand, issue no stock, have no dividends and serve no shareholders. By law, a nonprofit corporation’s surplus must be invested back into the organization and the community it serves. That’s how South Nassau has functioned since 1928. Ninety years of community stewardship has resulted in investing and reinvesting in the community and the residents who live here.
If hospitals like South Nassau aren’t adequately reimbursed for the services we render to Empire BlueCross members, there will be no surplus and no ability to reinvest in the hospital.
After years of annual cuts in Medicare and Medicaid funding to local hospitals, commercial insurers like Blue Cross must make up the difference. If they continue to raise insurance premiums on employers to increase investment reserves and profits, rather than funding important medical services, we all will lose.
That’s why South Nassau’s negotiations with Empire BlueCross are so important, and why ratepayers should be concerned. New York hospitals operate with one of the lowest surplus rates in the U.S. — 47th out of 50, to be exact. Given the lack of surplus, local hospitals are increasingly at risk for underinvestment, while the cost of operating continues to rise over time. Over the past decade, 45 New York hospitals have closed. It’s a dangerous trend.
It’s time that elected leaders start asking hard questions of Anthem BlueCross’s leadership. Is the corporation only about profits and not about patients? State officials — who have regulatory authority over the insurance business — must join the fight to persuade companies like Empire BlueCross to be willing to finance and support vital medical services at a level that ensures quality, safety and patient satisfaction. Profit for profit’s sake in human services will get us nowhere, and will undermine South Nassau’s legacy of service to our communities.
It’s past time to hold Empire BlueCross accountable. Your community’s health may depend upon it.
Richard J. Murphy is the president and CEO of South Nassau Communities Hospital in Oceanside.