Shame on Wall Street, But Shame on Healthcare Leaders Too

I'm more than a little irked by what I've been reading the past couple of days about the latest possible finance scandal. The New York attorney general has started an investigation of eight banks—Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole, and Merrill Lynch (now owned by Bank of America)—to see if they provided misleading information to Standard & Poor's, Fitch Ratings, and Moody's Investors Service. The information they may have provided would've caused inflated grades of certain mortgage securities. That's no small accusation; investors use these ratings to decide whether to purchase mortgage securities.

Now, I can't be the only one who reads these things and thinks, "Seriously, are these people so greedy that they couldn't see past the dollars in their eyes to realize that what they were doing might hurt millions of people? Was a yacht or a new plane worth demolishing so many people's livelihoods, and seeing multitudes of hardworking people lose their homes?"

It's beyond shameful to think that the mortgage crisis was surrounded by even more calculated lies that were fed to the ratings agencies. No matter how outraged I am about this, I recognize that it's highly unlikely that anyone will get anything more than the usual slap on the wrist. The average American would already be behind bars, but these are no average Americans. They'll be jet-setting in no time, albeit after they've done the usual TV mea culpa, and millions of Americans watch their financial futures drastically diminish.

Why should healthcare finance leaders care about this, though? Well, if it isn't enough that the lack of moral leadership in the finance industry nearly bankrupted more than a few of you, they also drove your charity care numbers up. You now are listening to sad tales of former $100k technology whiz kids who show up at your ER with no cash to pay the bill for their newly broken leg; after all, they have no job. And though they may have the money to pay you, they just can't spare the cash because they are already tapping into their savings and 401(k) plans (if they have any money left in those) to pay for their mortgages. And, they have to pay their mortgages, because if they don't they'll lose their homes and then they'll be worse off.

I'd like to just be angry about situation and blame the financiers, but I know enough to say that in actuality, the healthcare industry didn't do much to stop Americans from going broke either. Sadly, in some respects, the healthcare world is no less scrupulous than the banking industry. No one was crying foul the last 10 years when healthcare rates continued to go up for patients. Certainly all healthcare finance leaders cried out when reimbursements were threatened or when regulations were adjusted, but it seems no one had any time to actually stick up for their patients—to "fight the good fight" against what everyone knew was happening.

The fact is, before the financial crisis that led to the recession, it was the healthcare industry that was putting people out of their homes. In 2008, the Health Matrix: Journal of Law-Medicine noted that half of all foreclosures have medical causes, and that a medical crises put 1.5 million Americans in jeopardy of losing their homes in 2007.

So while relaxed lending standards, increasing interest rates, and irresponsible borrowers—not to mention plain old greed—all factor into the recession, it is likely that the ever-increasing medical costs would have forced increases in the number of foreclosures anyway.

Simply, as employee contributions to healthcare insurance doubled from 1999 to 2008 (the total cost for family coverage averaged $12,680 by 2008, a 5% increase over 2007), employers naturally tried to keep their businesses going. As any CFO will tell you, that meant either laying off staff, cutting benefits, or keeping wages flat. Sadly, if wages remain stagnant, which they did, but everything else goes up—including healthcare costs—things get lopsided.

In some instances, rather than cut benefits, some employers tried to pass along the costs to their already financially strained employees, bringing high-deductible health plans into vogue. A Kaiser survey reports annual deductibles jumped an average of 29%, to $1,344, for those with family coverage in 2008.

It's not news that healthcare is expensive, or that it's also a business. But I do marvel that when the financial woes brought on by unscrupulous finance industry activities hit, many hospitals started seeing even more patients come to them without insurance or the ability to pay. Suddenly, providers started speaking up. A collective cry arose from hospitals nationwide, saying, "We need help. The finance industry has messed up and now even more folks can't pay us. We'll go bankrupt."

Yep, after a bit of squawking, the healthcare industry got its version of a bailout in the form of the Affordable Care Act—at least to some degree. Unfortunately, that law doesn't go far enough and really protect your patients from losing their homes any more than the finance industry bailout helped anyone other than the companies that got us in this mess to begin with. People will still need to choose between paying their high deductibles or their mortgage, and guess what; they're going to pick their mortgage every time.

The only way that's ever going to change is if healthcare providers begin to support the patients and work with (or perhaps in some instances against) the health insurance companies to craft truly reasonably-priced coverage. Still, most healthcare providers are too busy these days trying to clean up the financial mess left behind by the finance industry to put any time into that effort. So, I suspect that it's more than likely that we'll see a repeat of this foreclosure cycle for many years to come. Perhaps that thought will get you as ticked off as it does me.