The power industry is in dire financial straits at least in major part because utilities are paying escalating costs for power while the prices they charge consumers are capped by the state. Medical facilities and providers here in the Bay Area have also seen business costs skyrocket because of increased costs not only of energy but of housing, labor and supplies as well.
New equipment is expensive and usually requires a large capital outlay.
Like the private utility companies, academic medical centers do not have the flexibility to recoup rising costs because the charges to consumers are capped by binding contracts with private health insurance companies. And the government continually ratchets down Medicare payments, which keep reimbursements far below the actual costs of delivering care. Stanford Hospital is facing financial pressures, and we should all be troubled at how a hospital full of patients can nevertheless hemorrhage money. This is similar to the child who takes lemonade from the family refrigerator to sell to passersby for a penny, only to wonder why his family isn't thrilled with his or her business acumen. Eventually, Sutter signed a contract with Blue Cross but not until many of its California Care HMO patients were drawn into the fray and told that they had to change physicians or pay more to see their usual doctors at Palo Alto Clinic and other Sutter facilities.