The Journal Register (Medina, NY)

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October 23, 2013

LETTER: Insurance reforms would help nursing home

Medina Journal-Register — In the case of the county nursing home, privatization will likely cost more and provide less. Private firms have no magic bullet; they’ll have the same issues, but, in addition, will need to make a profit.

Various studies show that private firms buy into publicly run facilities and services at considerably less than their value. We recently spent $10 million on the nursing home expansion. Will we recoup that and the value of the facility if we sell it? Not likely. We’ll accept as little as $6 million. So we’ll lose out.

Privatization often costs more. Recent history offers some examples:

• Of the last Iraq War, numerous accounts showed as much as five times the expenditures, than if the branches of the U.S. military had provided the same services. Further, there was much waste. One of many accounts was in the Wall Street Journal, “Study Finds Extensive Waste in War Contracting.”

• College education provides an example of “less for more money.” The graduation rate at not-for-profit colleges is 65 percent, at public colleges 55 percent and at for-profit colleges, 22 percent. The for-profits are successful financially, often at taxpayer expense, but fail at educating.

• Efforts to partially privatize Europe’s equivalent of Social Security resulted in a 40 percent reduction in benefits. Imagine if we’d converted before the 2008 crash.     

In Orleans County’s Request For Proposals from nursing home buyers, we suggest to any firm that they could reduce costs by lowering the numbers and wages of employees. Won’t that negatively affect care quality? Lower care quality may cause more hospitalizations, at considerably more cost (shared by the county) than nursing home care.

With for-profit privatization, medical costs have increased disproportionately. Until 1983, most hospitals and medical insurances were run by private not-for-profits. Since then, for-profit firms have taken over, hundreds of hospitals have failed and insurance and tax costs have risen dramatically.

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