No fat in the health-care system? GAO report finds otherwise

Arthur Caplan

November 15, 1993|By Arthur Caplan

SOME of the dopiest, zaniest assertions flying around in the media about health care reform involve the subject of rationing.

For some reason, many experts and pundits who are otherwise sensible, cogent and reasonable turn into vein-bulging, fulminating loons at the suggestion that it might be possible to find sufficient resources within America's present health care budget to pay for a decent package of care for everyone.

"Impossible!" they seethe. "You cannot get something for nothing," they solemnly intone in one opinion-page column after another. "No matter what Clinton says," the dour-faced sourpusses of the Sunday morning talk shows, otherwise known as economists or Republican members of Congress, postulate. "There is no free lunch!"

Most of us upon arising from our slumbers on a Sunday morning lack the gumption to want to debate people who look like the "befores" in hemorrhoid commercials. So, the belief that we will have to spend more on health care to achieve the universal coverage that the president proposes tends to solidify into common wisdom.

But, to be blunt, the notion that there is no way to pay for basic health care for all Americans without sticking you with a bigger bill is simply the ideology of those already making a pretty good living out of the status quo.

If you don't think so, I recommend you obtain an October 1993 report, "Medicare: Better Guidance Is Needed to Preclude Inappropriate General and Administrative Charges," published by the U.S. General Accounting Office. Despite its title, the report is just what the doctor ordered for those who say there is no spare change in the current $900 billion we are spending on health care.

GAO officials reviewed the general and administrative expenses billed to the Medicare program by a giant hospital management company, Hospital Corporation of America, for the fiscal year ending in December 1991. At that time, Nashville-based HCA owned and operated 74 medical and surgical hospitals and 54 psychiatric hospitals.

The GAO report focuses on $2.6 million of submitted expenses that you and I indirectly paid through our taxes. The bean counters found that $1.1 million of the total was "unallowable, questionable or unsupported."

So what is it that GAO finds dubious because the expenses are "not related to patient care"? Put down your cereal spoon because what follows is not pretty.

In the $1.1 million of questionable expenses are: $3,053 for a dinner cruise at Opryland USA for the chief financial officers of HCA; $24,849 for entertainment at a meeting at Hilton Head Island, S.C., attended by employees of the company and their spouses and children; $11,641 for employee tickets to the symphony, theater and ballet; and $14,523 for "a disc jockey, musicians and clowns to entertain at employee functions; golf at a chief executive officer's conference, a reception at a local comedy showplace and a river dinner cruise."

But wait, it gets better. HCA also had expenses in the amount of $26,248 in fiscal year 1991 to pay for a public relations firm to "carry out a media relations program designed to counteract negative publicity" generated by an investigation by Texas authorities into abuses at psychiatric hospitals in that state.

Another $16,419 was spent on marketing and promotional activities that the GAO believes were directed toward "increasing the number of patients at HCA hospitals.

More than $65,000 shows up for the cost of "researching the tax consequences to HCA and its preferred stockholders of an exchange of preferred stock for debentures, and printing and mailing quarterly dividend and tax information letters."

This sort of white-collar welfare is a mainstay of the current health-care system. As GAO notes, "HCA is not the only health-care provider that has included unallowable or questionable costs in Medicare cost reports."

Reviews of 19 other hospitals and two health care corporate offices in other parts of the country turned up $50 million in unallowable costs and $3 million in questionable expenses.

The view that there is no fat to be found in our current health-care system is nonsense. A health-care system that makes you and me pay for advertising, lobbying, investment newsletters and posh corporate parties is a health care system that is a long way from having to ration or raise taxes to achieve decent coverage for all its citizens.

Arthur Caplan is director of the Center for Biomedical Ethics at the University of Minnesota Medical School.

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