Editorial – VA Clinics Latest Chapter In Failed Privatization

The Tomah Journal

January 3, 2008 – Tomah, Wisconsin – Ah, the wonders of privatization.

On Dec. 10, locked doors greeted veterans seeking treatment at U.S. Department of Veterans Affairs (VA) clinics in Rice Lake and Hayward. Corporate Wellness & Fitness, the Kentucky company contracted to operate the clinics, cut and ran after just six months in Hayward and three months in Rice Lake. The company said it was losing $26,000 a month and that the VA reneged on promises to guarantee the venture’s profitability. The Rice Lake clinic reopened Dec. 26 with VA personnel, but the Hayward clinic remains closed.

The fiasco raises numerous issues. Business Week magazine reported Corporate Wellness & Fitness “agreed to accept a fixed sum per month instead of having the VA reimburse it dollar for dollar … It quickly felt pressure from the government to spend more on supplies and equipment than it had budgeted and could pay.” Aren’t businesses supposed to consider these factors before they submit a contract bid? It seems that government contracts, at least under the Bush Administration, follow the rules of crony capitalism: profit is privatized, risk is socialized.

Even more fundamental is whether privatization, and the inevitable profit/loss calculations that come with it, is in the best interests of veterans or taxpayers. Treating veterans is an inherently unprofitable enterprise. Nearly all wounded veterans have complex medical traumas that far exceed their ability to pay. VA hospitals and clinics don’t exist to turn a profit; they exist to provide the best medical care possible for those who risked their lives in defense of their country. Their treatment is a public, not a private, function.

If the government were serious about privatization, it would abolish every VA hospital and clinic and simply give veterans vouchers for their medical care. So-called public/private partnerships, like the ones in Rice Lake and Hayward, blur the line between public and private, encourage private vendors to believe government owes them a guaranteed profit (see, “cost-plus” contracts) and often lures private contractors into the pay-to-play world of campaign contributions (see Halliburton, Blackwater, etc.).

The VA system exists because the free market is an awkward and inefficient delivery mechanism for veterans health care. When it’s absolutely, positively necessary for a group of people to receive medical care, there is no substitute for socialized medicine. That’s why VA employees, not Corporate Wellness and Fitness, are delivering health care to veterans in Rice Lake.

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