There is no question that America’s safety-net hospitals are in trouble. But it is important to understand this trouble started before private equity companies and hospital REITs entered the market. Congress, state legislators and others need to evaluate the legal environment for private equity in hospital acquisitions. However, there is no question that the financial problems facing safety-net hospitals are not the result of sale leaseback transactions. The problem is reimbursement. If we want urban and rural safety-net hospitals to survive and continue to provide services to low-income and undocumented residents, we need to pay hospitals appropriately for their services. Attributing blame to hospital REITs for the problems of safety-net hospitals is illogical, lacks an understanding of hospital economics, and is wrong. Any legislation in this area must discern the difference between cause and effect. If it does not, the legislation will make things worse.
Fred McKinney is the co-founder of BJM Solutions, an economic consulting firm that conducts public and private research since 1999, and is the emeritus director of the Peoples Center for Innovation and Entrepreneurship at Quinnipiac University.
