Today, hospitals don’t collect on two-thirds of their bills. This means, for every dollar the hospital charges its customers, the average customer actually pays $.33
Now I’m not an economist, but I know enough to know that when a company has to give away most of its product for free, its going to increase the price of the rest.
I am a product of my family, including my grandpa -- a life-long Republican, until recently.
My grandpa is not a genius, but he’s the smartest man I know. Give him some nails, he’ll build a house. Give him a steak, he’ll cook you dinner. Ask his opinion, he’ll tell you he doesn’t know.
He taught me that we don’t know most things. The while it takes precision to build a good table, it take humility to predict the future -- the humility to trust the instinct against the temptation to prove our genius.
He’s told me a few times about how he’s managed his finances. A manager at a large manufacturing firm, he built a healthy retirement on a modest income.
He often talks about the economics of the housing crises. He’d say, “think about it. If the average person shouldn’t be able to afford the house they are living in, the price is too high.” He'd go on to talk about the absurdity of short-term trading and the unpredictability of short-term fluctuations.
His explanation would provide more detail, but his conclusion said it all: Invest in the long-term.
I don’t know that much about Obamacare. I’m sure it could be a better bill. I’m sure it could have been worse. But, my instinct tells me that hospitals, a private industry, should thrive when more customers pay their bills. So I think about it. If the average hospital has more paying customers, hospitals will become more profitable, even if they are forced to keep their prices down.
So, I’m not an expert financial investor, but I’m going to buy some stock in hospitals. Because, in the long-term, the profitability of hospitals will increase, although the absurdity of the short-term debate over health care may cause some fluctuations.
I was thinking about the advice you’ve given me. So Merry Christmas Grandpa, I bought you some stock in hospitals, too.
