The joke’s on us as RI officials fall into communist clichés.
Don’t let things like this slip under your awareness or your commentary, because plenty of Rhode Islanders have no experience or intellectual foundation to question the reporting:
The R.I. Department of Health on Thursday ordered the owner of Roger Williams Medical Center and Our Lady of Fatima Hospital to take immediate steps to stabilize their finances after finding the two facilities are struggling to pay their bills.
The Health Department said its compliance order follows an extensive review that determined California-based Prospect Medical Holdings is underfunding both facilities, calling the infraction part of a larger pattern of noncompliance.
While reviewing such news, keep regulatory context in mind. When a government agency claims that a company is “underfunding” some operation or other, they mean that they aren’t funding it at the level at which government officials desire — or have artificially required based on mandates and regulations. The same government officials have every incentive to demand that other people always provide more funding, and they face no consequences if their demands destroy the industries they oversee. Indeed, the more harm they do to healthcare, the more leverage politicians and bureaucrats have. We’ve fallen into a trap of perverse incentives in democracy.
As if to amplify the point, the Department of Health’s order is for the healthcare company to spend more money on oversight:
The compliance order requires Prospect to hire an independent fiscal monitor to determine the operating costs of its Rhode Island hospitals, as well as an independent on-site operations manager who will report to the Health Department on the extent to which vendor non-payment has previously impacted patient care.
That is, a company that’s having trouble paying its bills now has to spend some hundreds of thousands of dollars more for government-mandated inhouse bureaucrats. The thinking is arguably inverted; government agencies hire independent managers and monitors because they are not generally run by people with the specialized skills the situation requires. Private companies don’t work the same way. Here’s the real indication of our problem, as citizens, though: Even if in some circumstances this might be rational, on its face it is counterintuitive, at best, and yet the diktats are not questioned by journalists or explained by the government agents.
One suspects the RI officials see themselves as attempting to use their power to force an out-of-state owner to increase funding for people in our state, but those parent organizations are not simply sitting on cash as their suppliers refuse to extend short-term credit and their customers find services disrupted. And to the extent the parent companies find themselves with a pool of cash that neither suppliers nor customers are able to demand through market mechanisms, the cause is sure to be government manipulation of the market giving the parent company that increased leverage. In that case, the solution is to find and ease those distortions, but how likely is it that a government-mandated monitor will turn around and tell government officials that they’re the problem?
After walking through the analysis, though, put aside the economic theory. If it ceases to be profitable for companies to run hospitals, then they won’t run them. We’re already hearing complaints (including from progressive journalists) that healthcare providers are becoming difficult to find in the Ocean State. Government cannot mandate industries into existence, at least not for long, and Rhode Islanders need to think that reality through quickly.