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The Real Kings of the Hill
WASHINGTON WATCH
MICHAEL J. PENTECOST, MD
The Real Kings of the Hill The dance is as old as the Republic. With 3 or 4 slightly star-struck clients in tow, the lobbyist choreographs a passage through the marble halls of the Cannon, Rayburn, and Russell congressional office buildings on Capitol Hill. Their destination? A prized audience with a member of Congress or the member’s senior staff. Their hope? To find a receptive hearing for their cause—perhaps a new bridge, a federal facility back home, a tax break, or a change in Medicare policy. Not surprisingly, some of these meetings, perhaps those facilitated by well-aimed financial contributions, are more productive than others. No strangers to this dance, health care interests were 3 of the top 5 contributors in 2007 (Table 1) [1]. For all the success of their physician, pharmaceutical, medical device, and health insurance colleagues, few come away from Washington happier than hospital executives, especially those from nonprofit institutions. Why the smiles? After being slammed by managed care in the 1990s, they have shepherded their institutions through a dramatic financial recovery. Between 2001 and 2006, the net income of the 50 largest nonprofit hospitals increased by nearly 800%, from $545 million to $4.3 billion [2]. With 55% of hospital revenue coming from Medicare and Medicaid, the well-worn path to Capitol Hill is not hard to understand. Along the way, those healthy bottom lines have percolated back into their communities, making hospitals engines of economic growth— economic muscle begetting political clout, which fosters more financial
Table 1. Largest US lobbyists, 2007 Lobbyist US Chamber of Commerce General Electric Pharmaceutical Research and Manufacturers of America American Medical Association American Hospital Association AARP Exxon Mobil AT&T Amgen General Motors
Contributions $52,750,000 $23,620,000 $22,733,400 $22,132,000 $19,734,545 $19,540,000 $16,940,000 $16,936,109 $16,260,000 $14,560,000
Source: Birnbaum [1].
strength, and so on and so on—a tidy and virtuous circle for sure. The scale of their financial impact? Community hospitals represent $648 billion of annual spending, or nearly a third of the $2.1 trillion national health care budget [3]. They are the country’s second largest employers, exceeded only by restaurants. And with a 2-to-1 ripple effect, hospitals result in $1.9 trillion of economic activity and touch nearly every sector of American business, including finance, retail, and transportation (Table 2).
© 2008 American College of Radiology 0091-2182/08/$34.00 ● DOI 10.1016/j.jacr.2008.05.006
More than a health care payroll, nonprofit hospitals have spent enormously, nearly $125 billion from 2001 to 2006, on capital construction. Some hospitals have become more than just healthy; rather, they have evolved into financial behemoths. The Mayo Clinic has 1.75 million visitors a year and annual revenues of more than $6 billion and, with 30,000 staff members, is the largest employer in Minnesota [4]. The Cleveland Clinic has twice the space (12 million square feet) of the Pentagon and is the second
Table 2. Hospital impact on sectors of US economy, 2006 (in billions) Sector Impact Health care and social assistance $659.5 Manufacturing $281.1 Real estate and rental/leasing $177.7 Finance and insurance $119.9 Professional, scientific, and technical services $78.0 Retail trade $76.7 Information $61.4 Transportation $58.4 Accommodation and food services $48.2 Utilities $33.4 Source: American Hospital Association [3].
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Table 3. Health care and manufacturing employment, select metropolitan areas, 1972 and 2007 Manufacturing Health Care Area Brownsville-Harlingen, Texas McAllen-Edinburgh-Pharr, Texas Duluth, Minnesota Utica-Rome, New York Erie, Pennsylvania Flint, Michigan National average
1972 17.5% 8.8% 9.3% 29.4% 41.4% 44.2% 23.9%
2007 6.2% 3.6% 6.5% 9.9% 18.2% 11.3% 10.2%
1972 5.6% 4.9% 9.3% 6.5% 6.9% 6.3% 5.2%
2007 22.7% 21.6% 19.8% 17.3% 16.8% 14.6% 11.1%
Source: Dougherty [5].
largest employer in Ohio. The University of Pittsburgh Medical Center has 4 times more employees than the next largest company in western Pennsylvania. In the past 10 years, Northwestern University–affiliated hospitals have completed the largest construction projects in Illinois history. As powerful as these urban and national enterprises are, on a proportional basis, they are no more (and maybe less) influential than their rural counterparts, frequently the direct or indirect source of 20% of local jobs. As a percentage of the local workforce, the largest health care employers are not in Houston, Texas, but Brownsville and McAllen; not Rochester, Minnesota, but Duluth; not Pittsburgh but Erie (Table 3) [5]. For sure, part of the story in these communities is about the decline in other sources of jobs as much as the growth in health care. Whatever the cause, the numbers and resultant political impact speak for themselves. Back on Capitol Hill, what constituency does every member of
Congress represent? What does every congressional district have in common? Not a refinery, an entertainment industry, a port, a financial district, or an agricultural community. Every district has a hospital, from the smallest in size (located in Manhattan and containing Columbia Presbyterian Medical Center) to the largest (in Alaska, which has more than 40 hospitals with 11,000 employees and total combined budgets of $1.9 billion). As an example, take a look at West Virginia, where 2 of the top 3 employers are hospitals (the biggest is Wal-Mart; ditto for Ohio), in particular the state’s southern coal region, especially around the Huntington-Ashland metropolitan area. Between 1972 and 2007, mining declined from 1.27% to 0.84% and manufacturing shrank from 27% to 8.4%; all the while, health care increased from 7.3% to 18.7% [5]. Who would have ever thought? In a region whose geography and people are forever etched in the history of American commerce—Matewan, “Bloody” Mingo County, John L. Lewis, the United Mine Workers— health care employees outnumber miners 20 to 1.
Back to the dance. Who might be watching and counting the votes of all those medical workers? Sens Robert Byrd (D, WV), the chamber’s most senior member, and Jay Rockefeller (D, WV), the chair of the Subcommittee on Health Care and the Committee on Finance, to name but two. In the health care debate that seems to inevitably loom, there will be winners and losers, allies and enemies, shifting alliances and contentious debates. Who is likely to prevail? Don’t bet against the kings. REFERENCES 1. Birnbaum J. Maybe just name the building’s lobby after her. The Washington Post. April 15, 2008. 2. Carreyou J, Martinez B. Nonprofit hospitals, once for the poor, strike it rich. The Wall Street Journal. April 4, 2008. 3. American Hospital Association. Beyond health care: the economic contribution of hospitals. Available at: http://www.aha.org/ aha/content/2006/pdf/ECONRPT3.pdf. Accessed June 26, 2008. 4. Mayo with everything. The Economist. February 21, 2008. 5. Doughtery C. Factories fading, hospitals step in. The Wall Street Journal. April 15, 2008:A1.
Michael J. Pentecost, MD, Mid-Atlantic Permanente Medical Group, Kaiser Permanente, 2101 East Jefferson Street, Rockville, MD 20852; Institute for Health Policy in Radiology, American College of Radiology, 1891 Preston White Drive, Reston, VA 20191; e-mail: [email protected].
MICHAEL J. PENTECOST, MD
The Real Kings of the Hill The dance is as old as the Republic. With 3 or 4 slightly star-struck clients in tow, the lobbyist choreographs a passage through the marble halls of the Cannon, Rayburn, and Russell congressional office buildings on Capitol Hill. Their destination? A prized audience with a member of Congress or the member’s senior staff. Their hope? To find a receptive hearing for their cause—perhaps a new bridge, a federal facility back home, a tax break, or a change in Medicare policy. Not surprisingly, some of these meetings, perhaps those facilitated by well-aimed financial contributions, are more productive than others. No strangers to this dance, health care interests were 3 of the top 5 contributors in 2007 (Table 1) [1]. For all the success of their physician, pharmaceutical, medical device, and health insurance colleagues, few come away from Washington happier than hospital executives, especially those from nonprofit institutions. Why the smiles? After being slammed by managed care in the 1990s, they have shepherded their institutions through a dramatic financial recovery. Between 2001 and 2006, the net income of the 50 largest nonprofit hospitals increased by nearly 800%, from $545 million to $4.3 billion [2]. With 55% of hospital revenue coming from Medicare and Medicaid, the well-worn path to Capitol Hill is not hard to understand. Along the way, those healthy bottom lines have percolated back into their communities, making hospitals engines of economic growth— economic muscle begetting political clout, which fosters more financial
Table 1. Largest US lobbyists, 2007 Lobbyist US Chamber of Commerce General Electric Pharmaceutical Research and Manufacturers of America American Medical Association American Hospital Association AARP Exxon Mobil AT&T Amgen General Motors
Contributions $52,750,000 $23,620,000 $22,733,400 $22,132,000 $19,734,545 $19,540,000 $16,940,000 $16,936,109 $16,260,000 $14,560,000
Source: Birnbaum [1].
strength, and so on and so on—a tidy and virtuous circle for sure. The scale of their financial impact? Community hospitals represent $648 billion of annual spending, or nearly a third of the $2.1 trillion national health care budget [3]. They are the country’s second largest employers, exceeded only by restaurants. And with a 2-to-1 ripple effect, hospitals result in $1.9 trillion of economic activity and touch nearly every sector of American business, including finance, retail, and transportation (Table 2).
© 2008 American College of Radiology 0091-2182/08/$34.00 ● DOI 10.1016/j.jacr.2008.05.006
More than a health care payroll, nonprofit hospitals have spent enormously, nearly $125 billion from 2001 to 2006, on capital construction. Some hospitals have become more than just healthy; rather, they have evolved into financial behemoths. The Mayo Clinic has 1.75 million visitors a year and annual revenues of more than $6 billion and, with 30,000 staff members, is the largest employer in Minnesota [4]. The Cleveland Clinic has twice the space (12 million square feet) of the Pentagon and is the second
Table 2. Hospital impact on sectors of US economy, 2006 (in billions) Sector Impact Health care and social assistance $659.5 Manufacturing $281.1 Real estate and rental/leasing $177.7 Finance and insurance $119.9 Professional, scientific, and technical services $78.0 Retail trade $76.7 Information $61.4 Transportation $58.4 Accommodation and food services $48.2 Utilities $33.4 Source: American Hospital Association [3].
879
880 Washington Watch
Table 3. Health care and manufacturing employment, select metropolitan areas, 1972 and 2007 Manufacturing Health Care Area Brownsville-Harlingen, Texas McAllen-Edinburgh-Pharr, Texas Duluth, Minnesota Utica-Rome, New York Erie, Pennsylvania Flint, Michigan National average
1972 17.5% 8.8% 9.3% 29.4% 41.4% 44.2% 23.9%
2007 6.2% 3.6% 6.5% 9.9% 18.2% 11.3% 10.2%
1972 5.6% 4.9% 9.3% 6.5% 6.9% 6.3% 5.2%
2007 22.7% 21.6% 19.8% 17.3% 16.8% 14.6% 11.1%
Source: Dougherty [5].
largest employer in Ohio. The University of Pittsburgh Medical Center has 4 times more employees than the next largest company in western Pennsylvania. In the past 10 years, Northwestern University–affiliated hospitals have completed the largest construction projects in Illinois history. As powerful as these urban and national enterprises are, on a proportional basis, they are no more (and maybe less) influential than their rural counterparts, frequently the direct or indirect source of 20% of local jobs. As a percentage of the local workforce, the largest health care employers are not in Houston, Texas, but Brownsville and McAllen; not Rochester, Minnesota, but Duluth; not Pittsburgh but Erie (Table 3) [5]. For sure, part of the story in these communities is about the decline in other sources of jobs as much as the growth in health care. Whatever the cause, the numbers and resultant political impact speak for themselves. Back on Capitol Hill, what constituency does every member of
Congress represent? What does every congressional district have in common? Not a refinery, an entertainment industry, a port, a financial district, or an agricultural community. Every district has a hospital, from the smallest in size (located in Manhattan and containing Columbia Presbyterian Medical Center) to the largest (in Alaska, which has more than 40 hospitals with 11,000 employees and total combined budgets of $1.9 billion). As an example, take a look at West Virginia, where 2 of the top 3 employers are hospitals (the biggest is Wal-Mart; ditto for Ohio), in particular the state’s southern coal region, especially around the Huntington-Ashland metropolitan area. Between 1972 and 2007, mining declined from 1.27% to 0.84% and manufacturing shrank from 27% to 8.4%; all the while, health care increased from 7.3% to 18.7% [5]. Who would have ever thought? In a region whose geography and people are forever etched in the history of American commerce—Matewan, “Bloody” Mingo County, John L. Lewis, the United Mine Workers— health care employees outnumber miners 20 to 1.
Back to the dance. Who might be watching and counting the votes of all those medical workers? Sens Robert Byrd (D, WV), the chamber’s most senior member, and Jay Rockefeller (D, WV), the chair of the Subcommittee on Health Care and the Committee on Finance, to name but two. In the health care debate that seems to inevitably loom, there will be winners and losers, allies and enemies, shifting alliances and contentious debates. Who is likely to prevail? Don’t bet against the kings. REFERENCES 1. Birnbaum J. Maybe just name the building’s lobby after her. The Washington Post. April 15, 2008. 2. Carreyou J, Martinez B. Nonprofit hospitals, once for the poor, strike it rich. The Wall Street Journal. April 4, 2008. 3. American Hospital Association. Beyond health care: the economic contribution of hospitals. Available at: http://www.aha.org/ aha/content/2006/pdf/ECONRPT3.pdf. Accessed June 26, 2008. 4. Mayo with everything. The Economist. February 21, 2008. 5. Doughtery C. Factories fading, hospitals step in. The Wall Street Journal. April 15, 2008:A1.
Michael J. Pentecost, MD, Mid-Atlantic Permanente Medical Group, Kaiser Permanente, 2101 East Jefferson Street, Rockville, MD 20852; Institute for Health Policy in Radiology, American College of Radiology, 1891 Preston White Drive, Reston, VA 20191; e-mail: [email protected].