During the Pandemic Does It Make Sense To Decrease Wages of Hospital Personnel?

CBS News reported last week that hospitals have been cutting the pay of physicians and reducing nursing and other staff in their Emergency Rooms in the midst of the Covid-19 pandemic.  In fact there are many reports from all across our nation of wage cuts for medical staff in hospitals and group medical practices just at the time when they are most needed, the risk is high, the demand is critical, and they are being honored by the public as heroes for their commitment, Herculean efforts and life-saving skills.

In what Alice in Wonderland world does that make any sense?

By way of contrast a news article in today’s Washington Post reported that the African nation of Ghana, where Covid-19 is becoming a serious problem, announced an immediate 50% increase in wages for medical personnel, care for any staff who acquire the disease, and death benefits.

Why do we have this absurd difference in the treatment of essential personnel? 

There is an explanation.  Most hospitals today are owned by corporations and operate as business entities where profitability is the goal even in hospitals that maintain the fiction that they operate as not-for-profit entities.  Some hospitals [including my local hospital in Florida that is owned by Cleveland Clinic] contract the operation of their ER to for-profit management companies that employ physicians the way Walmart hires workers and treats them comparably.  Hospitals are “losing” money because highly profitable elective procedures have been postponed and treating those who need medical care in the ER is unprofitable.

 

Hospitals could choose to incur debt or transfer building or unrestricted funds to cover their increased operating expense, suspend executive pay during the crisis and let them volunteer, postpone the purchase of million dollar pieces of equipment, suspend construction projects temporarily, delay acquisitions for a year and focus on using those funds to increase wages rather than decrease them.

While some will argue that I have oversimplified medical services’ financial problems, which I concede have been exacerbated by Covid-19, I contend that the pandemic has brought the real issue into focus—the profit motive that underlies almost everything in medicine.  Hospitals want to build bigger, better, fancier.  Medical equipment is highly profitable.  Prescription drug prices are more expensive than their real costs warrant.  Personnel management companies want a piece of medical personnel wages.  Hospital managers are driven by profits and high salaries.  Insurance companies pay for some of the direct costs but they want a piece of every service.  Every part of the system is driven by a profit motive that is inappropriate in what--I believe--should be a service industry.

At the end of the day it depends on whether the primary driving purpose behind physician and hospital services is to save lives and serve people or to make a profit for owners and managers.  That will determine the priorities, how the money flows and who benefits from providing medical services.