This is Richard Wolff from Democracy at Work responding to another Ask Prof Wolff question
from our Patreon community. This one comes from 'Emily
Fontaine' and I really appreciate Emily's question because it gives me a chance to talk
about the whole issue of so-called non-profit institutions in our society.
Emily's question is about non-profit academic hospitals. And she wonders,
quite rightly, about how and why they're able to pay such enormous salaries to the people who sit
at the top of their administrative hierarchies and how that comes to be. Especially since these
hospitals - these non-profit hospitals - like their pro-profit or for-profit counterparts are so
likely to overwork and underpay the vast majority of their nurses, nurses aides,
and all the people who make the hospital actually run... run below the level of the doctor.
Okay, so let's begin. First, this whole concept of non-profit
is a bit of a hustle and that has to be exposed. What we're talking about here is taxation.
Some institutions get themselves exempt from taxes. They had to fight back in the 19th
or 20th century to get themselves exempted from taxes. And that was a hustle right there. Because
other businesses still have to pay taxes, weren't able to get an exemption, although many tried.
And so hospitals could and did succeed in getting themselves exempted from taxes. This does not
mean that you don't make a profit. It just means you don't pay taxes if and when you do.
But, you know, this was always a problem because the businesses and the people who still have to
pay taxes looked with a certain skepticism at these institutions that got out of it.
So they christened themselves with a new name. They rebranded and they called themselves 'not for
profit' because that sounds a heck of a lot better than 'tax exempt' which is the truth of it all.
Non-profits can make a profit. They just don't pay a tax on it
and they are required to plow that profit back into the business. Which many businesses do
anyway. So, as I said, it's a bit of a hustle. In the United States about two-thirds of our
hospitals are not-for-profit and about one-third are for-profit. So that begins our story here.
What about the for-profit ones? Well, those are exactly what they say.
Money is invested, shares are sold to the public, a board of directors runs the hospital
and does it for the same reason businesses do everything else: make money; make a profit. Profit
is the bottom line. That's the capitalist mantra. That's the capitalist system's goal and purpose.
What are the non for-profits doing? Well, they don't have to pay taxes so that gives
them an advantage. But in exchange for getting a tax exemption the few concerned legislators
who gave them the tax exemption said that the not-for-profit in exchange for not paying taxes
had to attend to community needs. How interesting. The for-profit
ones didn't have to attend to community needs. You might think about that distinction for a while.
Anyway, here's the reality today: the not-for-profits
mostly serve middle-income and poor neighborhoods. They rely very heavily on government
insurance programs which don't pay so well for the services that hospital
provides. Therefore the for-profit hospitals are distinguished by focusing on where the money is:
rich neighborhoods, wealthy cities, rich people - the kind of people who are covered by a
private insurance program which pays well. Which is why the for-profit
hospitals focus on those people and that equipment and those services which are where the money is.
This is a horrible way of organizing medical care. Because it obviously means the for-profits
are making the money and buying the most advanced equipment to capture those who
have the money to pay for high-quality care. And then the not-for-profits try to keep up.
Now the bottom line: the model here, unfortunately, is the for-profit hospital.
And how does it run? Like every other capitalist business. A tiny group of people at the top;
the administrators, the board of directors of the corporation that owns the for-profit hospital...
they make all the decisions and they grab as much of the profit as they can in very high salaries
and in paying out dividends to their shareholders. They're the ones who dominate. They're the ones
who control. They're the ones who buy the latest equipment. They're the ones where the money is and
the not-for-profits try to keep up and they copy the model. They, too, have a board of directors.
It hires the top administrators. It wants to get those who know what they're doing.
So it takes them from the private sector. And it has to buy their services
and it pays them. Because that's what they think hospitals ought to be.
If a hospital were run as a co-op... if all the people who worked in a hospital together
decided how to run the hospital they wouldn't run it like a capitalist corporation.
That's what a co-op is. As a difference, it would be democratically run. It wouldn't be top down.
And then you wouldn't copy the high salaries for those at the top and the order-taking,
drudgery, underpayment, and overwork imposed on the nurses and all the other people in a hospital.
It's a comment on the inadequacy of our medical care system because even the not-for-profits
are shaped by the model of a profit-making enterprise.
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