I have posted previous notes questioning the non-profit status of hospitals, particularly the large, entrepreneurial ones (see: Can U.S. Hospitals Become More Oriented to Health Outcomes?; Cities Begin to Question Non-Profit Status, Tax Breaks of Their Hospitals). I was reminded of this topic by a recent article regarding a commercial agreement between Mayo and Gentag concerning wearable biosensors: Mayo Clinic and Gentag, Inc. Announce Agreement To Develop Wireless Sensors for Treatment of Obesity and Diabetes. Below is an excerpt from it:
Mayo Clinic and Gentag...have reached an agreement to develop the next generation of wearable biosensors designed to fight obesity and diabetes....A first-of-its-kind, the wearable patch sensors are the size of a small bandage, and are designed to be painless, wireless and disposable. In the bandage is a sensor that communicates via a closed-loop diabetes management system which is compatible with cell phones. The system will allow researchers to monitor movement and develop treatments for obesity and related conditions. A joint intellectual property (IP) agreement with Mayo Clinic made the research and development of this tool possible. Gentag signed a patent pooling agreement with Mayo Clinic for the management of IP related to wearable patch sensor and wireless communication technologies. Under the agreement, certain patent rights and technologies of both Mayo Clinic and Gentag will be combined and commercialize
I have no problem with new product initiatives such as this one on the part of Mayo. My problem is the non-profit status of health systems like Mayo as they launch a wide array of commercial healthcare products. This same point about the tax-exempt status of hospitals is clear in a recent article about the University of Pittsburgh Medical Center (UPMC) and the lofty salaries of its executives (see: UPMC board Chairman Beckwith cheers on CEO Romoff). Below is an excerpt from it:
Critics attack...[UPMCs] aggressive growth, aiming attention at its tax-exempt status. They question [CEO Jeffrey] Romoff's salary [of $6.6 million a year] and the yearly pay of nearly two dozen UPMC executives who each make more than $1 million.“...[The UPMC] board is pretty much aloof and invisible,” said former state Sen. Jim Ferlo...a longtime critic of UPMC. “They've insulated themselves and disavowed any responsibility for oversight or for accepting responsibility to public criticism, whether it's from public officials or the people who pay the premiums....Under Romoff's tenure, UPMC has grown from a couple of hospitals in Oakland to a network of 20 hospitals that stretch from Western Pennsylvania to Italy.With more than 62,000 employees, UPMC is Pennsylvania's largest employer.
The cost and management of healthcare is increasingly determined by a small number of players -- Big Pharma, large health insurance companies, large health systems, and the U.S. government. A term that has been used to describe this phenomenon is Big Medicine (see: Physician Private Practice Declines; the Last Barrier to Emergence of "Big Medicine"; The Transition to "Big Med": Need for Emphasis on Standardization and Cost; The Institutionalization of Healthcare; Consequences of Big Medicine?). This concentration of power is very "unhealthy." UPMC dominates Pennsylvania as the largest employer in the state. It needs to continuously expand and make more money in order to pay its executives exorbitant salaries that are then justified, in a circular fashion, by the ever-increasing size of the organization. I don't think that the state governments have the incentives or power to fight back and perhaps the federal government may not be the answer. The ACA has some bearing on the tax-exempt status of hospitals but this process seems to be stalled by the paralysis of the federal government (see: Tax-Exempt Status For Nonprofit Hospitals Under The ACA: Where Are The Final Treasury/IRS Rules?)