Mitt’s presidential run is based on his business experience; he says he will run America just like he ran his company, Bain Capital.
What business is Mitt in? Bain Capital does not manufacture goods or provide services that create productive assets in the United States. No, Bain extracts existing wealth from businesses and communities redistributing it to wealthy investors.
The Times describes how Bain Capital put together a deal with Merrill Lynch and private equity firm, KKR, to purchase Hospital Corporation of America for $33 billion in 2006. Bain, Merrill, and KKR bought HCA with a down payment of $1.2 billion each, borrowed $16 billion using HCA assets as collateral, and assumed $11 billion of HCA debt. Bain collected millions in fees and commissions, out of the borrowed funds, for brokering the sale to itself.
By 2010, Bain’s staff reductions, cost cutting, and aggressive billing of Medicare/Medicaid had substantially increased profits. HCA borrowed more money, which the board voted to pay as dividends to Bain, Merrill, and KKR. Each firm received $1 billion.
In 2011, Bain took HCA public again. The three original investors each cashed out $500 million worth of stock. Bain and KKR still hold $4.8 billion in HCA stock. It is possible they will see a 350 percent return on their original $1.2 billion investment.
There must be new, living wage jobs, improved outcomes in patient health, and efficiency gains if the market rewarded Mitt’s efforts so handsomely. How else could profits have risen so much, so rapidly?
Answer: Bain came up with three ways to get more revenue out of middle class working families, Medicare, Medicaid, private insurers, and HCA.
HCA began to manage its Emergency Rooms for “patient acquisition.” To attract patients, HCA used billboards with ‘wait time stopwatches’ displayed on them. (Sound familiar?) Between 2007 and 2011, Emergency Room visits at HCA hospitals increased 20 percent.
In 2008, HCA changed the system of ‘classifications’ for patients accepted for treatment in its Emergency Rooms. Suddenly, they were all sicker. This allowed HCA to perform more tests and bill Medicare higher charges. In the first quarter of 2009, HCA reported a profit increase of $100 million over the previous quarter.
Finally, Bain instructed HCA to “right-size” hospital-wide medical staffing using computer programs to project patient loads and then set the minimum number and type of staff. HCA nurses and physicians repeatedly voiced concerns about the negative impact of staffing reductions on patient care.
Bed sores, which can cause serious infection and deterioration in health, are relatively easy to prevent with adequate levels of professional staff. For years, HCA has had a poor record of avoidable bedsores. Eight of the 15 worst hospitals for bedsores in the United States are owned by HCA.
Under Bain, HCA’s corporate debt, not its assets, more than doubled, and HCA increased health costs for individuals, Medicare, Medicaid, and private insurers.
There is no evidence Bain’s policies improved quality of care and considerable evidence it placed HCA physicians and nurses in positions of choosing between their jobs and patient treatment. But it has extracted money, lots of money, from Medicare/Medicaid (taxpayers) and American business for a few very wealthy Bain investors.
Bain will muscle up to the public trough one last time when it sells the debt-laden FICA stock before its price plummets when another Medicare/Medicaid billing investigation begins. Then, Mitt and friends will walk away from a hollowed out public institution built over decades by the co-operative work of thousands of Americans; protected by our legal system; and staffed by our public schools and universities.
Mitt says he will run the country like a business. If his stewardship of HCA is an indicator, Mitt and his friends will run the country to extract maximum wealth from working people and the government for the private benefit of a very few billionaires. The voucherization of Medicare is only the beginning.