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How KFC’s War On Arby’s Ruined American Health Care. No, Seriously.
Inside the rise of America's largest for-profit health care chain.
By Sean Morrow, More Perfect Union
Just how much can we blame a failed pitch for Kentucky Roast Beef—a roast beef offshoot of KFC—for our current health care problems?
Well, kind of a lot actually.
We did a whole video on it for our Class Room explainer series. The original idea for HCA Healthcare—now the biggest for-profit health care system in America—came from an aborted plan by KFC to start a roast beef chain to destroy their rival, Arby’s.
In the decades that followed, HCA took advantage of loose regulations on Medicare and other health care laws (while lobbying to make them even weaker) to become an industry behemoth and help shape the broken system we live with today.
The story focuses on the father and son duo, Thomas Frist Jr. and Sr., who led HCA for decades. I want to share a few choice Frist moments we left out of the piece, like this one, where Frist Jr. speaks about employer-sponsored health care.
“[There are new laws for] certain minimum benefits that employers must provide for their employees as far as health care coverage. I’m basically against that as far as a competitive marketplace type of person, but as a provider it is going to help me at HCA a lot.”
In producing videos for The Class Room, we like to reference the Netflix sketch comedy show I Think You Should Leave with Tim Robinson for moments like this:
That’s Frist Jr. admitting that he only cares about health care access if it helps his bottom line. When I first saw that quote, I could barely sit still, I was so angry.
Does HCA do anything altruistic? Well, they certainly want people to think they do. Let’s look at their most recent earnings report to see how they approach “charity care,” or “uncompensated care.” It reveals a lot.
Start by looking at “total uncompensated care,” which includes charity care and uninsured care, and in 2023 came out to around $8 billion dollars. Sounds like a lot, right? Well, that’s just what they would’ve charged for the uncompensated care. The real cost to HCA? A little over $800 million. One-tenth of what they would’ve charged.
That shows us two things. The first is, again, an “oh my God, he admit it” moment: HCA’s ‘cost-to-charges ratio’ is 10.4%. They are charging patients and insurers ten times what the care actually costs.
And even worse: they’re writing off the total charges rather than the costs on their taxes.
The cast of characters in the HCA story goes beyond the Frists, including one we had to cut for time entirely: Florida Senator Rick Scott.
Mergers and consolidation were always a huge part of HCA’s strategy. In 1994 HCA merged with Columbia Care, another large hospital chain. Columbia was run by Mr. Scott himself.
So a decade later when HCA/Columbia was found guilty of massive Medicare fraud—ripping off, overcharging, and generally exploiting Medicare—Rick Scott was the public face of the scandal.
Today Senator Scott rails against “socialism” and has threatened to defund Medicare and other important programs like Social Security entirely. Scott thinks essential programs like these are too expensive. But perhaps they’d be less expensive if Thomas Frist Jr. and Senior, and Scott himself, hadn’t been ripping them off all these years.
Another non-Frist character we mention in the video is HCA co-founder Jack Massey. You’ll never guess where he ended up.
Massey’s initial success came from building an empire out of the small Kentucky Fried Chicken business that he bought directly from Colonel Sanders. He used that money to help found HCA.
The next logical step after hospitals? Prisons. Massey’s big investment after the Hospital Corporation of America was the Corrections Corporation of America.
Like HCA, CCA was a pioneer: the first for-profit prison chain. One of the founders said of Massey’s investment in the new business,” CCA will be to jails and prisons that are owned and managed by local, state and federal governments, what Hospital Corporation of America has become to medical facilities nationwide.”
From exploiting people’s love for fried chicken, to exploiting people’s need for health care, to exploiting the criminal justice system, Jack Massey led quite a life. Rest in profit, Jack.
We hope you take the time to watch the video—it’s a fun one. Though as I say on-camera, it also made me madder than any I’ve ever worked on.
We’d like you to take that as a challenge: do you have an example of corporate greed that’ll rile us up even more? Let us know, maybe we’ll do a video about it: email@example.com.
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