In addition, we have Medicare Advantage (MA, also known as Medicare
Part C) a deal which essentially can make a Medicare patient (for a little extra
premium) an HMO patient. For the patient
this comes with the typical HMO advantages (such as vision and hearing and
other coverages, and usually drug coverage so you don’t need a separate Part D
insurance plan, and often little or no co-pay) and disadvantages (limited
networks of doctors and hospitals, often poor out-of-area coverage), but it has
real negative impact on the health system. MA programs get special treatment from
the Center for Medicare and Medicaid Services (CMS), including a big increase
in payments if they can demonstrate, with all the wizardry, bells-and-whistles,
and large staff combing and padding the Electronic Health Record (EHR) that
their patients are sicker. In fact, they are demonstrably less sick than
traditional Medicare patients; indeed, the older and sicker MA patients are
encouraged, subtly or not, to transfer to traditional Medicare. A recent
article by Richard
Kronick on the Health Affairs blog
demonstrates that MA programs are being overpaid by $200 Billion. This is
real money, and it is not by accident, as discussed by Don
McCanne in his Quote of the Day.
But the less-discussed contributor to our high health costs
are the hospitals and health systems that make big money. This is true even
when those health systems are ostensibly not-for-profit. The for-profit
hospitals and health systems are at least open about it, and they pay taxes.
Non-profits do not pay shareholders, and also do not pay taxes. The presumed
reason for this is because of the public service that they provide to their
communities. But while this may be true of many small-town and rural hospitals,
which are also in the most danger of closing and leaving their communities
bereft of hospital care, it is often not at all the case for large urban health
systems. They make money. For example, an
interview on the NPR program “1A”, otherwise focused on the Peak Health
System in Summit County, CO that has had some success in reducing costs in that
rural tourist county, the Colorado insurance commissioner Michael Conway
discusses the proposal for a “public option” in his state and notes that asking
hospitals to give back a little is not too much for the urban hospitals making
$2 billion a year (about 28 min in).
And, since they do not have shareholders to pay, the health
systems reinvest most of the money they make into expanding hospital services
or building new buildings. This could seem like a good thing, except that the
choice of what services to expand is often (usually) based not on what services
the community needs most, but what services will – make them more money! And,
also, hopefully make them more desirable destinations for high-margin services than
the other urban hospital systems with which they compete. So if, as is usually
the case, cancer care and heart disease care and orthopedic care are big
money-makers, they build fancy new cancer hospitals and heart hospitals and
orthopedic hospitals to try to draw well-insured patients away from their
competitors. Thus, we get redundancy and overcapacity in these high-end
services in competitive cities, with each shiny new cancer center seeking to
lure patients from the one that’s a few years older across town.
Meanwhile, these urban communities do have other, less
lucrative, needs that are scarcely ever the target of major investment. In a
rational system, the money made on those “profitable” services could be used to
invest in and subsidize lower-profit (or in some cases money-losing) services
that are in great demand in the community. These certainly include primary
care, mental health/behavioral care, drug addiction treatment, and virtually
any care delivered to poor or uninsured people. A reasonable health system
would just subsidize this care, and not bill and dun people repeatedly for
money that they do not have, and cannot and will not pay, ruining their credit,
attaching their wages, and challenging their ability to pay for other things,
like shelter, food, and clothing.
But privately-run health systems almost never work this way
(even if “non-profit”) because their boards like them to make money. And reward
them for making money. An article in GQ in
April, 2019, reports that CEO salaries at our big health system are doing
very well indeed; at the 62 largest, the 2018 salary averaged $18 million! The
other “C-suite” executives (COO, CFO, CMO, etc.) are also very well paid; it
would not be rare for a major hospital system to have 10 executives making over
$1M a year. These CEOs are sometimes doctors, but often accountants or MBAs –
basically they run their hospitals as a business, and often have no other
context to relate to. When thinking about community benefit, they think of “community”
as the “community of well-insured”, the “community of suburbanites”, and of
course, especially the “community of potential donors” (cool that they can even
get people to give them money and take a tax write-off!). They almost never
think of the “community of need”. They are sometimes briefly interested as long
as government will give them money for helping the needy, but
return-on-investment (ROI) is always measured in dollars, not population
health.
This is what happens when the private sector is given
control of an industry; they pursue their own benefit. It is unconscionable
that we do this in areas like health care which are needed by everyone. Virtually
all decisions are made with their eyes on the bottom line. Is CMS going to pay
for more residents? Let’s get more cardiology fellows to do procedures and make
us money, not more family medicine residents who will go out and meet the needs
of people, even if not in our hospital.
There are people who are concerned about government-run
health care, and this spills over to their concern about government-financed
health care, such as Medicare for All. The problem is that there is a status
quo, and that status quo is destructive to the health of our people.
It needs to change.
[i] Himmelstein
DU, Campbell T, Woolhandler S, “Health Care Administrative Costs in the United
States and Canada,
2017”, Ann Int
Med, doi:10.7326/M19-2818, published online Jan 7, 2020.
Nice article.
ReplyDeleteWe also maintain a blog at DocStudents.com