Saturday, December 13, 2014

On The Real Health Care Front: Bye Bye Tenet

At some point in the regulatory process, the business being regulated decides that the regulator – federal, state or municipal – exerts such control over the business or property that “ownership” reverts from the nominal owner to the regulator. At this point, the business begins to look for the exit sign.

Karl Marx and his students, among them “A” student V. I. Lenin, may have thought it was necessary for the proletariat to wrest ownership from capitalists so that their ill-conceived profits might revert to the proletariat. That is the central doctrine of The Communist Manifesto, with its stirring opening: “Workers of the world unite; you have nothing to lose but your chains, and a world to win.” Mr. Marx may have been a poor economist, but he was a superb ideological terrorist.

It turns out the Marxists were wrong: It is not necessary for the proletariat  -- in reality, the fascist state -- to seize the means of production so they might “own” property and businesses once directed by greedy capitalists who, following the revolution, would be dispossessed of their property by the state – i.e. the Communist Party – and sent packing to the Gulag.

None of this was necessary. There is a “Third Way” to “seize the means of production,” through the regulation of contracts, while leaving nominal ownership in the hands of capitalists.

By way of illustration, let’s suppose you are considering buying a house. You intend to make improvements on it. The walls are purple. Your wife had vowed to divorce you if the walls are not painted off-white, and so you make a note on your “to do” list. Other things must be done to improve the house before the both of you move in.  The terracing is such that mowing grass might be too much a chore, so you plan to plant bushes and flowers – your wife LOVES flowers – on the terraced part of your property. An inspector has told you that a new roof is necessary. You plan expensive alterations in the interior of the house; the bedroom must be enlarged, the kitchen remodeled. All these changes must occur within a certain time frame. Your mortgage already has been approved by a bank, and you have arranged financing for the intended changes.

A few weeks before you are due to move in, there is a fascist knock on your door.  Herr Otto, the state regulator, riding crop in hand, tells you 1) You cannot repaint the walls according to your wife’s specs because regulators have determined that all houses, new or remodeled, must have purple walls; 2) the roof must be replaced by a steel corrugated roof containing solar panels; 3) the grass cannot be removed for ecological reasons that do not seem convincing to you; and 4) all other intended improvements must be certified, on pain of serious penalty, by Herr Otto, your state’s regulatory enforcer.

Now then, the question before the House is not -- should you decline to complete the purchase of the house; you would be a fool to do so.  Nor is the question before the House – should you accede to the regulator’s enforcement actions? You cannot refuse and purchase the property; if you are unobliging, fascist Herr Otto is authorized to repossess the purchased property on behalf of the proletariat he represents.

No, the only question before the House is: Who will really own the property once the regulators have been satisfied – you, the prospective title holder, or the regulatory state that henceforth may determine EVERYTHING you do with “your” property?

This is not one of those “How many angels may fit on the head of a pin?” conundrums.  Beyond a certain point, use is ownership, and ownership is use. If the use of a business or property may be determined by a regulator, ownership reverts to the regulator in proportion to the quantity and quality of the regulations the state imposes on the nominal “owner” of the property or business. If we acknowledge that the whole purpose of a car is to take me from point A to point B, and if the state should regulate the use of my car so that I cannot drive it beyond ten miles of my property, in what sense may it be said that I “own” – have fee use of -- the car?

Owing to onerous regulations, Tenet has withdrawn from a deal to purchase and run for profit five of Connecticut’s economically ailing hospitals. The Connecticut hospitals facing economic difficulties are: Waterbury, St. Mary's, Bristol, Manchester Memorial, and Rockville General. Waterbury Hospital, underwater and drowning in red ink, is gasping for air.  The straw that broke Tenet’s back was a late ruling by the state’s Office of Health Care Access, which proposed “setting strict controls over staffing, services and pricing as a condition of approving Tenet's application to buy Waterbury Hospital and convert it from a non-profit to a for-profit institution,” according to a story in CTMirror. Those regulations are union sops.

Tenet quickly issued its response to the ruling:

“We respect the role the state regulators have in providing guidance and oversight to the healthcare industry, and understand the responsibility they take in discharging their duties. Nonetheless, the extensive list of proposed conditions to be imposed on the Waterbury Hospital transaction, which is only the first of four transactions for which we've made applications, has led us to conclude that the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders."

The usual culprits washed their hands of the matter. House Speaker Brendan Sharkey of Hamden and incoming Senate President Pro Tem Martin Looney of New Haven both claimed they had no notice of the ruling that broke the camel’s back.

Of course they didn’t.

Waterbury Hospital, attempting to raise its head above the red ink, has said that layoffs are on the table. No matter, with a wink in the direction of unions, Mr. Sharkey commiserated, "People love to have their small, local community hospitals, but they are very expensive.''

And what if financial conditions at Waterbury Hospital worsen – as they will? Not to worry, Mr. Sharkey advised; in that case, he would support a taxpayer bailout of the hospital, the default position of all progressive legislators who, in words of Progressive President Barack Obama, “do stupid stuff.”

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