Why is publicly provided health care so expensive? One reason is the the fraud which is bound to occur. The New York Times reports (“Hospital Grew…“) that New Jersey’s largest health care provider–St. Barnabas Health Care System–bilked $630 million from the federal government between 1995 to 2003.
Medicare pays extra cash to hospitals for the very sick and very expensive patients they call outliers. In the St. Barnabas case, the fraud occurred when the hospital chain inflated the bills of these outliers. For those who say that ‘this is just the thing that happens when hospitals only look at the bottom line’ it is interesting to note that St. Barnabas is listed as a non-profit hospital chain. I wrote in March questioning the validity of tax breaks for non-profit hospitals and this evidence helps to buttress my argument. Patrick Burns, an analyst at Taxpayers Against Fraud, stated:
“The way the system has operated, it’s almost irresponsible corporate governance for hospitals not to cheat Medicare.”
This is not the only case of Medicare fraud in recent years. According to the San Francisco Chronicle (“Tenet settles…“), Tenet Healthcare, one of the largest U.S. hospital chains has paid $727 million to settle an overbilling fraud investigation. Brian Martin, a sociology professor at the University of Wollongong in Australia has a nice summary of how Tenet deceived the federal government.