Auto makers fight expansion of Detroit area hospitals

The big three auto makers are fighting expansion of Detroit area hospitals.

 

The big three auto makers are fighting expansion of Detroit area hospitals. What would happen if health care professionals started calling auto makers and their dealers with complaints about their anti-healthcare positions?

Auto makers depend on health care workers to buy their products, but as they try to defend their shares of the U.S. auto and truck markets, they fight the health care industry’s success at growing its share of the GDP. Typical of corporate losers, auto makers want the government to legislate against their most important suppliers—-physicians, nurses, hospitals and other providers. They’re happy to spend 20% to 25% of revenues on marketing and advertising and 10% to 15% of their revenues on maintaining their plants and equipment, but they won’t spend 8% to 12% of their payrolls on maintaining their most important assets—-the good health and welfare of their employees. (Don’t hold me to these educated guesstimate numbers.)

The Wall Street Journal story’s impact graphs:

Ford Chairman and Chief Executive Bill Ford Jr. said recently that rising health-care costs discourage manufacturers from adding jobs in the U.S. Calling for a “national dialogue” on the issue, Mr. Ford said health-care costs account for $700 of a total $1,200 cost disadvantage that Ford suffers against its major rivals. Editor’s note: How much do high management salaries, UAW wages, pensions obligations, advertising expenses, property taxes, income taxes, training costs, regulatory costs and lobbying costs account for the cost disadvantage? Let’s be real and not put all the blame on health care investments, which provide a relatively high ROI.

The three auto makers’ move has created a debate in Michigan that touches on larger national health-care issues, such as the role of prescription drugs in driving health costs and how best to offset the costs hospitals bear for providing medical care to the poor and uninsured. Do the auto makers have statistics that show how much they are contributing to the cost of caring for the uninsured and Medicare and Medicaid beneficiaries.?

The auto makers worry that the hospitals would add unneeded costs and lead to overcapacity in Detroit’s Oakland County suburbs. Many hospitals see increasing their presence in fast-growing, upper-income suburban areas as a way to subsidize care to uninsured and indigent patients’ in urban and rural areas. So who are auto makers to say what costs are needed, and how do they define overcapcity? Do they want hospitals to operate at capacity, which means they won’t have beds when local disasters and surges in flu cases overwhelm emergency rooms?

The concept of the Big Three urging hospitals to resist overcapacity is ironic, since U.S. auto makers for years have been unable to conquer chronic overcapacity in their own industry.

The auto makers complain that in their business, overcapacity drives prices down. But they argue that in the hospital business, overcapacity drives medical costs up, because it encourages doctors to put more patients—particularly those with rich health plans who pay little out of pocket—into empty hospital beds.

Auto makers don’t have the courage or clout against unions to change their benefit plans so that their workers would have the financial incentives to make more responsible uses of health care services. Don’t blame that problem on hospitals.

Commenting is not available in this weblog entry.

<< Back to main