Years ago when Tenant, Columbia and others were building out their networks, they purchased thousands of local community hospitals. They were viewed as undervalued assets. These large health conglomerates issued bonds to finance their acquisitions, and the first thing they'd do upon purchasing a small community hospital would be to sell the land it was on to one of their REITs. The community hospital then would begin paying rent to the REIT, and that in turn ultimately financed the acquisition. Community hospitals were effectively refinanced and mortgaged, instead of being free and clear of debt burden. No longer did the community hospital operate as an entity standing on fully paid for land. Historically, before the massive reconsolidation by Wall Street, Community Hospitals paid no rent. Why is this important? Examine the notion of 'capacity utilization.' Without debt, excess capacity is not viewed as a problem. Consider the local fire department. Paid staff resides at stations 100% of the time, regardless of emergency conditions. 100% state of readiness. Imagine if the fire station had to pay a mortgage: it would then be forced to convert it's unused (excess) capacity to a cost, and in turn focus on raising revenues to support its excess capacity. This is exactly the case with hospitals (and many other large U.S. businesses). Also, consider the corollary to "excess capacity," which is under utilization. Basically, there are costs whether or not the system is accessed. Over the past 30 years nearly all Wall Street wealth was the result of leveraged debt and tax loopholes: paying for corporate refinancings using interest deductions and phantom loss carry forwards. I believe that in addition to the mortgage securitization debacle, we will soon realize--from a greater, long-term public good standpoint--how misguided Wall Street has been in its use of debt. Despite various rationales about "unleashing pent-up equity" and applying it to good use, the public policy implications of Wall Street's actions are essentially criminal. We've mortgaged our basic infrastructure, and it's a real national security issue. Consolidation in virtually all industries was financed by securitized debt. And indeed, without debt many businesses are profitable and cashflow positive--they're able to generate a profit in excess of operating and payroll expenses. (This, by the way, is no excuse to pirate the equity of a healthy company.) All of our industries are suffering from too much debt and unfortunately, there currently exists no mechanism to put an entire industry into Chapter 11 restructuring. Much of this restructuring would be unnecessary had Wall Street not squandered valuable equity to begin with. Which leads us back to hospitals and health care in general. The rationale that drove consolidation were scale efficiencies...the ringing out of redundancies via mergers and acquisitions. Such "efficiencies" have not been without problems. We have two interesting points with regard to capacity utilization; (1) insureds that never use the system (yet pay premiums); and (2) uninsureds that never use the system. Between these two extremes we have a system that has varying degrees of utilization. How rational are pricing systems for services throughout the system? How is pricing set? (A practical example: a few years back my wife was in hospital for three days. Our bill was $22,000. Our insurer paid $9000, and we paid $1500, which was our deductible amount. The participating provider hospital charged off the balance and my guess is the hospital could also apply this write off against its taxes. The hospital took its aggregate cost--including its debt payment, and divided it by its total number of beds and applied that daily sum multiplied by 3 days. Yet consider all the empty beds. Absent the debt service, no way the charges would be so high.) The Health Care system overall needs find more rational ways to make the prepayment for care--which to a large degree insurance is--affordable. As it stands, medical costs include too much debt service--not just charges for basic labor and materials. Prescription: Massive debt restructuring must be part of any economic stimulus package...massive debt write down and/or conversion of debt to equity. A stimulus should focus on technology infrastructure and debt elimination. Do we need to reduce/remove much of the [institutional] debt service from health care, and place a moratorium on debt financings pertaining to expanding health care capacity? If we limit the private profit from the issuance of public debt, will we be taking a step to slow corporate welfare for institutions (and the folks that run them)? The answer is unclear. Yet considering the serious impact of debt default by large institutions it's time for society [and heretofore sleepy regulators] to take an interest in these private business behaviors. The Corker proposal for the automakers may turn out to have broader applications in the future. We'll see.