Why Are South Carolina Taxpayers Still Subsidizing A Government-Run Hospital’s Expansion?

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A year after we exclusively reported on some troubling allegations involving a politically appointed trustee at the Medical University of South Carolina (MUSC) in Charleston, S.C., the court case tied to those allegations is reportedly starting to heat up.

Depositions in the case involving MUSC trustee Michael Stavrinakis – brother of powerful lawyer-legislator Leon Stavrinakis – have been held within the last few weeks, sources familiar with the situation have confirmed.

Things aren’t looking good for the Stavrinakises, either … or the government-run hospital at the center of their drama.

While we await a resolution of that case, I wanted to bring our audience back to the bigger picture: The ongoing taxpayer subsidization of this government-run hospital system – which continues to use our money to unfairly compete against private sector providers.

MUSC – the subject of several recent galling controversies – has been engaged in a taxpayer-subsidized blitzkrieg aimed at expanding its domineering, anti-competitive reach across the South Carolina health care industry. This blitzkrieg has been funded with huge budget appropriations as well as mountains of taxpayer guaranteed debt.

For years, I have decried this unfair incursion into the free market – which MUSC insists is all about providing care to rural, underserved regions of the state.

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“Government should never compete directly in either the health care delivery or health insurance industries,” I noted in a column published back in May. “Sadly, MUSC is continuing to receive mad stacks of taxpayer cash to do just that.”

Earlier this year, MUSC officials appeared in Columbia, S.C. for a meeting of the S.C. Joint Bond Review Committee (SCJBRC) – a panel of lawmakers tasked with managing the Palmetto State’s bonded indebtedness.

At this meeting, MUSC president David J. Cole provided an update on the system’s financials as he seeks additional taxpayer funding – and debt authorization – from the state. Not counting debt and supplemental appropriations, MUSC is receiving $893.9 million from taxpayers in the current fiscal year (2023-2024) – including $125.2 million in general fund dollars. That’s out of a $6 billion annual budget, for those of you keeping score at home.

Those numbers will climb again in 2024 as powerful MUSC advocates in the legislature – including speaker of the House Murrell Smith, whose father is a trustee at the school – make sure the system gets whatever it asks for out of the budget process.

Nikki Setzler – a Democratic state senator from West Columbia, S.C. – took umbrage with MUSC’s incursion into the health care marketplace in the Midlands, accusing the hospital system of misrepresenting its mission.

“This isn’t a rural facility that you went into,” Setzler said during the meeting. “You came into an urban area to compete with existing quality medical facilities in the Columbia area. This isn’t where you’re trying to help us address rural health care, this isn’t trying to move people to Charleston, this is just – you came in and are competing with the local hospitals that are already there, established – some of which had relationships with you – and now you’re competing with them.”

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Cole also got blowback from Senate president Thomas Alexander of Walhalla, S.C., who noted MUSC ran a $90 million deficit in the Midlands region of the state for the second year in a row – a deficit which is projected to add another $60 million in red ink in 2024.

That’s a three-year total of nearly $240 million in losses. MUSC’s original “feasibility study” for this ill-conceived expansion projected it would make $31.5 million in the Midlands over the same three-year period – making this a $270 million miss.

“That’s not inconsequential, we’re not trying to make light of that,” Cole said at the bond hearing.

In the private sector, people get fired for misses like that … and facilities go under. Not with MUSC, though. In addition to its guaranteed appropriations and limitless government debt, the system was also able to call upon government contracts to mitigate its Midlands-area losses.

In fact, MUSC’s losses in the Midlands would have been far steeper had the facility not been bailed out by a taxpayer-funded contract with the S.C. Department of Corrections (SCDC).

Absent that contract, “we probably would have been faced with some difficult decisions,” Cole admitted.

Really?

“Difficult decisions?”

That’s the problem with this situation. The only “difficult decision” MUSC has ever had to face is deciding which sycophantic politician it needed to suck up to next as part of its ongoing effort to deprive South Carolinians of more of their money. Seriously … just hand out a few more board seats to powerful legislative leaders’ relatives and everything will work out, right?

Anyway, props to Setzler and Alexander for at least having the temerity to call out the failure of MUSC’s latest anti-free market expansion. Hopefully more lawmakers will join the chorus and – at long last – start holding this bureaucracy accountable for its increasingly costly, anti-competitive practices.

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ABOUT THE AUTHOR …

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven (soon to be eight) children.

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