Matt Stoller’s antitrust blog should be required reading for every American. Today’s topic is the corrupt system behind COVID medical shortages. Here’s an excerpt:
Today, corruption in these markets is so extreme that hospital executives themselves are often offered a cut of the fees from GPOs. In 2013, one analyst said that “many hospital executives who are part of the Premier alliance have learned to rely on that share back as an integral part of their annual compensation.” In other words, hospitals are buying supplies at inflated prices, and those suppliers use some of that extra money in direct bribes to hospital executives.
The legalization of kickbacks happened as a series of mergers in the 1990s consolidated power within the industry. In 1995, Premier Health Alliance, American Healthcare Systems, and SunHealth Alliance merged into the nation’s largest GPO, Premier. By 2017, the giants in the industry – Vizient, Premier, HealthTrust, and Intaler – came to manage $300 billion of hospital purchasing for 5000 health systems, or 90% of total medical supplies in the United States. These GPOs have deals with the three major distributors – McKesson, AmerisourceBergen and Cardinal Health – which precludes any smaller distributors from getting into the business. At this point, 90% of generic medicines are bought by just four firms.
And this consolidation and restructuring of hospital buying has ruined the American supply chain, and prevented the ability to rebuild it.
This applies not just to medical supplies but across the board. There are privately-contracted kickbacks in food, industrial supplies, furniture and the list goes on. The issue with medical supplies is an unintended (I hope) result of defensive consolidation in the health care industry. Individual practices disappeared in response to Sarbanes-Oxley, the Consumer Financial Protection Bureau, and the ACA. The same occurred nationwide in many industries, some of which disappeared altogether, as the successful war on small business and entrepreneurs was carried out with ruthless efficiency. Small hospitals were acquired and became part of chains, and accountability disappeared. A study by the New England Journal of Medicine two years into the ACA found that physicians who accepted Medicare spent more time on government paperwork than on dealing with patients. Decisions today on medical care are many levels removed from the physician and her patient.
This is yet another scandal covered up by the authoritarians. The day Lehman Brothers went under I called every client and told them to stop hiring anybody. Contract with outside labor brokers for contract labor; employers will be severely punished by Government with the 2009 inauguration. From 2009 to 2017 per-employee regulatory compliance burden, as tracked by Belmont University, increased from about $15K/employee to $27K/employee for small businesses. Cost-Benefit Analysis for new regulations was allowed to consider intangible offsetting benefits such as better self-image or improved community spirit. Needless to say, the cost of new regulations was always assessed as less than the value of benefits.
Getting off my soapbox before my blood pressure goes up any more.