Here’s a perfect example of what American capitalism has become: vulture capitalists swoop in to buy up a safety net hospital, close it, fire all the employees, turn the hospital into luxury condos that will be bought up by foreign million- and billionaires and, in an ingenious move, sell off their government-insured stock of indentured servants. Sound crazy? It just happened in Philadelphia.
Under the current system the government operates two systems of care: Medicare (we CARE for old people) and Medicaid (we AID the poor). In practice, a huge lump of Medicaid money goes to operating Safety Net Hospitals. In turn, those Safety Net Hospitals provide two incredibly valuable services to their communities: they service a group of people who otherwise struggle to access care and they train the next cohort of doctors that will care for all of us.
The program that funds this is the Centers for Medicare & Medicaid Services (CMS) – they dole out residency slots to Safety Net Hospitals across the county, assuring that underserved areas will have access to health care and that doctors are trained. CMS gives those hospitals $100,000 and the hospitals pay those residents $60,000 and pocket the rest. In addition – those hospitals get to bill for all the services those residents provide and profit from those services – let’s call it another $100,000 per slot per year.
So here’s where we are – a typical 3-year resident will net a hospital $420,000 – extended over 10 years each slot is worth $1.4 million dollars. The investment group that purchased Hahnemann University Hospital saw the opportunity – selling 550 slots worth (by our math) $770 million over the next 10 years for $55 million. A markdown for sure, but between the millions they’ll make converting the hospital to condos and the millions they made selling off a public asset I suspect they’ll be fine.
Most worrying of all, of course, is the fact that vulture capitalists across the country now see the opportunity. Each of the 130 or so Safety Net Hospitals across the country represent a huge windfall. A stock of extremely valuable real estate, tens of thousands of residency slots that can be sold off to the highest bidder and all of it financed by debt that can be shed in the bankruptcy that allows you to sell those slots. It’s the perfect grift.
But I’m sure none of them will do it, because it wouldn’t be nice.
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