Thinking Big about Healthcare: Preventing Profiteering and Improving Jobs

Public support for universal healthcare coverage in the U.S. has grown dramatically in recent years, but this support must be channeled into legislative policies that improve the healthcare infrastructure with public funds and reset healthcare’s financial incentives, according to Rosemary Batt ’73, ILR’s Alice H. Cook Professor of Women and Work Emeritus. 

Batt is co-author of a policy paper describing the U.S. healthcare system as one increasingly dominated by financial actors who extract wealth for themselves at the expense of patients. The paper was co-authored by Eileen Appelbaum and Brandon Novick, both from the Center for Economic and Policy Research.

“Our research shows that financial goals often dwarf the healthcare mission in large private-equity owned healthcare organizations as well as investor-owned chains, and even nonprofit systems,” Batt says.

Titled “End Profiteering in Healthcare,” the paper recommends a set of policies that would curb excessive wealth extraction and prioritize patient care. It is part of a larger project, Game Changers: Economic Policies for a Working America, coordinated by the Political Economy Research Institute at the University of Massachusetts. 

Providing public financing for the new construction and modernization of community hospitals is at the top of the list of recommendations. 

“Following World War II, the Hill-Burton Act funded the building of over 4,000 community hospitals that still serve the poorest rural and urban populations in the U.S.,” Batt says. “Our country needs to upgrade these hospitals so they can serve those most in need. Currently, these facilities are underfunded and closing at an alarming rate, or they are gobbled up by larger systems, which then close facilities and require patients to travel long distances to access services.” 

Another top recommendation is solving the “healthcare workforce crisis.” According to Batt, labor represents healthcare’s highest operating cost, causing healthcare organizations to compete by cutting staffing levels and compensation. 

“This degrades working conditions, leads to high turnover rates and undermines patient care,” Batt says. 

By setting minimum staffing levels for all hospitals and nursing homes, regulators could remove labor costs as a competitive factor. The recommendation includes raising the federal minimum wage and expanding public funding to train new healthcare workers. 

Additional recommended policies aim to reduce wealth extraction from healthcare organizations. Batt says, “Financiers need to be held responsible when they drive healthcare organizations into bankruptcy – a pattern especially linked to ownership by private-equity firms. They buy out healthcare companies using excessive debt, which is loaded on the company itself, and use other tactics, such as selling hospital real estate and pocketing the proceeds. This leads to financial distress or bankruptcy.”

Batt and her co-authors also propose policies to break up healthcare systems that have grown large enough to increase prices through market or monopoly power. According to the paper, dividing large horizontally and vertically integrated systems would lower prices and improve healthcare quality.

Finally, they recommend ending patent monopolies on medical products by replacing patents with government-funded research through competitive bidding and prize funds. In this way, medicines and medical devices could be priced as generics.

“I know these ideas are aspirational at a time when political polarization is severe,” Batt says. “But universal access to high-quality healthcare is a unifying theme for Americans across the spectrum. We need to think big.”