It's a tough market. Health care is also in a recession. People are not seeking care from their (non-existent) medical homes and seeking it at non-profit clinics and government sponsored outlets instead. This is remarkable, because usually, if you're sick, you scrape together what you need to get better if not well. There isn't enough charity care to go around. Those needing charity care exceeded the "free market's" ability to supply it long ago.
We need real health care reform. Our "free market" doesn't see their own mistakes. It has effectively priced health care beyond what the market can bear. The "free market" health care system has priced itself beyond what 25% of our population can afford. That 25% can only utilize health care services when they are in a health crisis. Prevention? Not happening.
The safety nets?
There is no safety net.
Safety nets are a lie, a myth or a meme (sort of like clean coal tech) that people fighting against health care reform say exists. They hope people won't do their home work to see through their corrupt, self-serving deceit.
Medicaid is a shrinking Safety Net
Medicaid is shedding enrollees, shedding covered services and shrinking reimbursements for what little they cover. The result is fewer physicians and facilities accept Medicaid patients. That's right, you can fall right through the holes in our current "safety net" and still not be able to get care.
Hospitals are Reducing the Percentage of Charity Care
The other half of the safety net? Non-profit hospitals have quietly replaced executives with Master's in Health Services Administration or Public Health with MBA's with Wall Street callousness. The results are hard driving campaigns for getting paid and it doesn't matter if people suffer and die as a result of these ruthless campaigns for cash. Public hospitals and non-profit clinics are attracting less doners and more government attention. Some hospitals are throwing in the towel and are selling themselves to for-profit chains and independent operators or converting to for-profit independently. Some non-profits gave up before. Some non-profits converted to for profit long ago. California tried to stop one conversion with little success.
Hospitals Choose Conversion to For Profit Status for Greater Business Freedom
Non-profit hospitals do make profits, but they are referred to as surpluses over expenses and they are completely reinvested into the organization for new equipment, renovations or expansion before the end of each fiscal year. Non-profit hospitals will run foul by over zealously pursuing self-paying patients who should really be caught up in a safety net, but aren't. Then there's Senators like Charles Grassley (R-IA) who want to mandate non-profit hospitals document 5% of their care be charity care; which will make it more attractive to convert to for profit status. It might be better for a mandate that all hospitals need to do some charity care, except in the for profit world; charity care is referred to as bad debt (non-profit hospitals have 2 "non-performing" designations, charity care and bad debt). The 2007-2009 outlook for non-profit hospitals is grim, so grim that we can lose these organizations (if we haven't already lost them ) one way or another.
Hospitals Convert to For Profit Status so they Don't Have to Reinvest All Profits or Reinvest on an Inconvenient Time Table
The issue with non-profit hospitals (and some for profit hospitals) is that they have to make enough money to pay their staff, keep up with the maintainance and expand, but how much is too much? A for profit organization can argue they can charge what they want in a free market. It's easier to become a for profit hospital and side step the argument that a non-profit hospital charges too much.
Bond Issues are Too Problematic in our Current Economic Situation
Both non-profit and for profit hospitals can raise capital by issuing bonds for specific purposes, but there's a lot of SEC rules about bond issues. Bonds are rated for their credit risk and you can imagine with the credit crunch what it is; no one is taking the assurances of a bank or insurance company on the soundness of a bond issue these days. Non-profits run on thinner margins, pay less to their top executives and are even more political than for profit organizations, but with the injection of MBA's in their management teams; that is changing. Non-profits "swim with sharks" these days. Access to capital is always the excuse for converting to for profit status, but usually it really means the top management wants bigger raises and less interference with their business practices or the amount of charity care they provide.
Government Insurances and Managed Care Underfund Reimbursements for Services
Medicaid and Medicare (2 links instead of one requires an artificial break here) pay below or close to and below break even points. Many HMO's come close to Medicaid level reimbursements. If you ask any hospital administrator what it costs for any given thing in the hospital, they can answer you. Ask what the average cost per patient per day is, and they can tell you a reasonable answer. Ask what it costs to administer a single pill, and you'll get a staggeringly high answer.
Hospitals have high overhead. They have huge outlays for building, equipment, supplies and employees. Neither Medicare or Medicaid pays anything toward overhead in their reimbursement schedules. By law they are only to fund the cost of the specified, billed product or service and that contributes to the problem.
Never Events Complicating Hospital Finances
Not paying for never-events further erodes financial viability and what do you do if some patient arrives already infected with a "never event"?. Medicare announced this first, WellPoint followed through and then the dam burst - no one is paying for never events. Maggie Mahar notes:.
If it is so important to prevent these "never events" from happening, why have WellPoint, Aetna, CMS and the "National Quality Forum" refused to create "how to" lists showing health care providers how to avoid these outcomes? Where's the clinical study showing us a practice model on how to prevent 100% of these "never events" in 100% of patients?
(emphasis mine) snip,
There are two reasons why WellPoint, Aetna, and CMS haven't published such how-to instructions. First, a set of instructions like this is just a fairy tale. Many of these "never events" just can't be prevented. How would insurers look if they published "how-to" instructions, health care providers followed those instructions to the letter, and the "never events" continued to occur? The insurers would get vilified. They don't want that. By focusing on outcomes rather than processes, the insurers can avoid the bad rap.
snip, again
By blaming the hospitals for events that some government-sponsored coalition says should "never" happen, they can increase their profits and vilify the "dangerous" health care providers. A win-win situation for the insurers and a lose-lose situation for the medical providers. It's all about the Benjamins. WellPoint and Aetna didn't crack the Fortune 500 by deciding to pay more for medical care.
It doesn't help to have HHS go schizoid on the subject of preventing never events. It seems that they were more concerned that MRSA could occur with the use of check lists and that might substantiate the case that not all MRSA infections can be prevented. That would be a problem. It would prove a "never event" can be an occasional event.
The unspoken aspect to the "never event" issue is what happens to the patients. Can patient's be coerced into signing away their rights? The patient had surgery on the wrong side of the body. The patient might be leary of having the causers of their suffering repair the damage. Now, who is going to supply the medical care needed to repair the problem? The insurer will not pay for the correction, so the question is who pays? Assuming someone will be able to pursuade a lawyer to sue or have the up front money to sue is absurd. Our legal system is based upon whoever has the most money wins. Right or wrong the care needs to be done and the uncertain payment issue further stresses the system.
Cost Shifting Allows a hospital to recoup the losses due to Uninsured, Underinsured, Uncompensated Care and Underfunding Private and Government Insurers.
Cost shifting is at an all time high, so when an uninursed or underinsured patient comes in, it's likely the hospital is going to ask for staggeringly high up front payments from them. Medicare isn't paying their share and now Manged Care Organizations are refusing to take on what Medicare and Medicaid leaves unfunded.
When Blue Shield of California enters negotiations with providers each year, hospitals are pretty frank about why they need to raise prices, says David S. Joyner, senior vice president for network management. One of the top reasons: Medicare and Medi-Cal, California's Medicaid program, aren't paying enough.
That fact won't come as a surprise to executives at most health plans, who for years have understood that they have to pay more when government payers fall short of what it costs hospitals and physicians to provide care, industry experts say.
What's new, however, is that a growing number of managed care companies and provider organizations are creating a bridge from the negotiation table to the public. They are crunching numbers and presenting statistics to consumers and businesses to demonstrate just how much private insurers have to pay because of the cost shift. And, they say, other managed care companies should start talking about the problem in their markets as well.
According to Premera, in 2004 hospitals charged private insurers $738 million extra and physicians charged $620 extra ($1.4 billion) to make up for what Medicare and Medicaid shorted them in the State of Washington. That translates to $902 per family insurance policy, or 13 percent of all commercial hospital and physician payments. In California, Milliman found similar results, Medicare and Medi-Cal created losses that cost employers and employees about $951 per family insurance policy. Cost shifting rose from 3.6 percent of premiums in 2000 to 9.5 percent in 2004. I can only wonder what percent it is today.
Rural Hospitals Too Small Too Vulnerable
I can't find the link to prove this, but if you google it and find it, I'll update this diary and add it. CMS made a major goof and gave Disproportionate Share payments to over a 100 hospitals with less than 100 beds which disqualifies them for the DSH program. These hospitals get a 10% overage for operating in a HPSA, Health Provider Shortage Area. It's not enough. Small communities need hospitals where it's safe to have babies and heart attack (MI) treatments and to be able to properly set broken bones. Just like urban areas. These small hospitals are sorely pressed by our "free market" that is punishing them. The small community hospital is disappearing.
More on DSH on Disproportionate Share Payments is available.
We are at the tipping point.
The inequitable reimbursement schedules stick it to the insured (in the form of higher premiums), underinsured (both higher premiums and higher copays) and uninsured (they got nothin') through cost shifting. We demand hospitals give the best of care. The latest in health care technology, but no one wants to pay for it. I've given you enough links that show you the problems, but nothing for how to go about the fix. There is no easy fix when it comes to hospital care reform. Our hospital system is one confusing, unholy, convoluted mess. This segment of the health care delivery system gets it from insurers, physicians, employees, government, JCOAHO and patient satisfaction. Government and private insurers have cut reimbursements and complicated the paperwork to the tipping point.
We need clarity when it comes to health care reform for hospitals.
We have a fight on our hands
Tactic #1: We need to say and reinforce every chance we get:
Health Insurance is No Guarnatee of Receiving Health Care
Tactic #2: We need simple talking points for health care reform as it pertains to hospitals - a very complicated problem. This is where I need your help. What I wrote above is an explanation of the issues. What's below is the smallest way I can convey the issues. These concepts need to become smaller. They need to come down to easy to understand and repeatable sound bytes that everyone can use to illustrate the very real problems we face.
- We need to cover everyone in every situation and eliminate safety nets. Everyone deserves a safety net.
- There needs to be an accurate assessment of what it costs to deliever care per product and service with an overhead component and a geographical index. Neither government insurers nor private insurers may go below these values.
- Remove the attraction for converting to for profit tax status.
- Non-profit hospitals reinvest their proceeds into their hospital system in new building, equipment or more employees. giving them more compliance paper work makes converting to for-profit more attractive.
- Don't allow regulations to be applied to non-profit hospitals that aren't applied to for-profit hospitals.
- Medicaid patients need more hospital facilities and the only way they will get them is to make Medicaid Reimbursements and compliance more attractive.
- Strengthen EMTALA, so patient's with life threatening conditions that are not in crisis cannot be kicked to the curb.
- Never Event policies must specify an accessible remedy to the patient for the medical errors.
- Rural hospitals that are not eligible for Disproportionate Share funds need greater access to Health Provider Shortage Area funding.