It seems that they're afraid of the millions of dollars of lost revenue, without considering the greater sum of expenses that they'd free up.
Many hospitals do; many don't because they feel it's a moral obligation to provide care to Medicare patients. Here's an example of that attitude: http://www.kevinmd.com/blog/2011/12/dropping-medicare-break-...
In order to stay in Medicare/Medicaid (which, as I said, many see as a moral requirement), hospitals are often required to lay off staff. Here's an example of 100 layoffs at Dartmouth Hitchcock hospital: http://www.unionleader.com/article/20111109/NEWS02/711099983
As a matter of fact, I can't recall ever reading an op/ed or anything by a hospital administrator complaining that they're being fleeced by medicare and losing a bunch of money on it. But I've seen a billion op/eds in the same template as TFA, bemoaning the byzantine and obfuscatory private insurance regime as something that completely destroys any market forces that should exist in the industry. I mean, one hospital charged one thousand times as much as another for the same treatment.
I have to conclude that bringing up medicare while the private insurance industry system is this flagrantly broken is nothing but a red herring.
I don't think a month goes by when I don't ask her this question. Something always comes up, where she's saying "Medicare just denied another $500K payment" or somesuch. And I'll say to her "you live by the sword, you die by the sword".
She admits that the net profit via Medicare is negative. But the decisions makers don't want to consider it. In this case, it's possible that they consider it their mission because they are a Catholic hospital. I can't see any answer in the general case.
And yes, there is inefficiency unrelated to Medicare, and yes, I've seen the anecdote about how doctors who own an MRI machine refer patients to get MRIs six times more frequently.
But Medicare underpaying, alongside what I remember hearing was a "bad payor mix" from ER patients, hurts.
If you're truly curious about how healthcare works, follow this blog http://histalk2.com/ and get a flavor for what's concerning IT people (which oftentimes is money).
But they can't very well give you a bill that with a line item that says "shifted costs from the old guy in bay 3 - $900".
For example, at one hospital where my family member works as a therapist: The hospital receives federal funding for area X, so the clinic area Y must accept Medicare. in Area Y, medicare pays far less than private insurance per hour of therapy, doesn't reimburse for patient no-shows, but doesn't allow the clinic to drop no-showing patients. So the clinic section of the hospital ends up paying staff hourly wages to do nothing some of the time, and is barely treading water the rest of the time.
Now, there's overhead, so it's better to have a full clinic with Medicare underpaying than a half-full clinic with no Medicare, but it's still a ripoff: private insurance / private pay is paying more for the same service than Medicare. If private insurers could and would demand the same terms as Medicare, the clinic would die.
Finally, maybe Medicare is still a good deal, due to that Area X funding? Maybe, but that's in a totally separate area, distorting the economics of both areas X and Y. It leads to political BS where the fancy X ward swimming in money and building a palace (like http://www.seattlechildrens.org/, have you seen that lobby?), so they pressure clinic Y to beg for donations from their own staff to stay afloat.