Wisconsin Hospital Closures: How Hospital Monopolies Threaten Community Health

The Issue

Wisconsin hospitals have the economic benefit of nonprofit status because they are structured as charities. Their lobbyists used their immense power  to talk the State Legislature into de-regulation in the 1980s, promising that, once unleashed, they would more efficiently provide high quality care at an affordable price to every community. 

Instead, they abused our trust by building massive hospital chains focused on the most profitable types of medical services. They increased prices to consumers in order to engage in cut-throat competition with each other, generating windfall profits for large hospital chains while bankrupting community hospitals. In their endless drive for more revenue, hospital chains destabilized the medical care system, drove up healthcare costs, and failed to provide the services that keep people healthy. 

The result of de-regulation has been the dramatic collapse in the Chippewa Valley of Sacred Heart and St. Joseph’s, which lost out in the feeding frenzy to their larger competitors. Now the larger hospital chains refuse to fill the dangerous care gap left by their predatory competition. Another example is the three large Milwaukee hospital chains who downsized and closed urban hospitals in majority Black and Brown neighborhoods, where the health needs are the greatest, and built massive state-of-the-art suburban facilities in wealthy predominantly white suburbs where they can extract higher profits.

Enough is enough. The hospital monopolies are non profits in name only, and are acting like banks, fossil fuel utilities, and other for-profit highly regulated industries.  It is long overdue for the hospital industry to lose its special protections and be regulated in the public interest. 

The issue is not public money or funding. It is the dangerous business practices of the hospital monopolies. No matter how much money we give them, if there is no accountability they will continue to rip gaping holes in the hospital safety net and leave communities holding the bag.

Firm and far-reaching government guardrails and protections are essential because the hospitals, through predatory competition, have built massive unaccountable monopolies which have used their power to drive up premiums and the cost of care for their own benefit. Independent hospitals, community hospitals, and small chains cannot survive because the big chains use their monopoly status to get preferential insurance deals, medical supply costs, and monopolize the specialists and services that generate the greatest profits. Patients are paying for this healthcare “arms race” in the form of sky-high insurance premiums, ruinous medical bills and a dangerously unstable system. 

The Solution 

Our state legislature has the power to put the guardrails back in place to stabilize our teetering healthcare system. Until they act, every community in the state risks suddenly losing critical healthcare access. 

Reestablishing public control of the hospital system is a stepping stone towards our North Star of Medicare for All, where democracy makes the key decisions about the human right to health care. We are calling for: 

  • The restoration of Wisconsin’s Hospitality Affordability Board, recklessly repealed in the 1980s. This will return public oversight to the prices the big hospitals charge. The Board will require that hospitals provide fair prices based on the actual cost of service. This will also make the system more stable by creating a level playing field for all hospitals and clinic systems, stopping big players from using their monopoly power to strong-arm insurance companies into paying inflated rates.
  • The Fair Hospital Competition Act. Bigger hospital chains and for-profit speciality facilities undermine smaller hospitals by duplicating their most lucrative services in an attempt to siphon revenue from their competitors. When this revenue is threatened, it de-stabilizes hospitals that use those funds to offset the costs of non-lucrative services, like mental health care or primary preventive care. The result is hospital closures as well as  communities without enough mental health care providers, for example, but with too many surgical facilities. 
    • The Fair Hospital Competition Act will restore the requirement, which hospital lobbyists got repealed in the 1980s, to require hospitals to prove the community need for any costly new medical service and capacity. 
    • This Act would also require the hospitals to cooperate and share the use of costly facilities. For example, if there is enough MRI capacity already in a region, a hospital will not be allowed to build a brand new unit just so they can drain off business from their competitors. Sharing of resources and avoiding wasteful duplication of services will lower costs for consumers, too.
  •  The Fair Share Hospital Act, introduced by Sen. Chris Larson, will require hospitals to  invest in community health at a level equivalent to their tax breaks–instead of extracting profit from the community and sending it elsewhere. The hospitals that are most likely to close are often those that provide the most community benefits (for instance, treating the most patients with Medicaid or Medicare, as was the case with Sacred Heart in Eau Claire). By ensuring that each hospital does their “fair share,” this legislation will even out the playing field for hospitals who are most committed to providing care, even when it is not profitable
  • The Legislature should act immediately to accept federal funds to expand BadgerCare so it covers more people. Research shows that expanding Medicaid reduced rates of rural hospital closure by 50%, because it provides a revenue stream desperately needed by small hospitals that provide the bulk of community care. They should also take up proposals, supported by nearly every Democrat in the Legislature, to “super-size” BadgerCare so that every Wisconsinite can “buy in” to BadgerCare and have a public option for quality, affordable health coverage. 

Citizen Action calls on Wisconsinites to reach out to their legislators and ask them to support Healthcare Protection legislation and stabilize our medical care system. The de-stabilized healthcare marketplace means that every community in the state is at risk, and the lives of our loved ones are at stake. Add your name to our petition to protect our right to healthcare.