Monday, August 31, 2020

Hospitals compete for money, not the people's health. We need to stop this.

For decades, Santa Fe, NM, had only one hospital. St. Vincent’s was founded 155 years ago by the Sisters of Charity, but was taken over by the national Catholic corporation CHRISTUS in 2008. It’s a pretty good hospital with about 200 beds, for a small city of 85,000. A couple of years ago, the largest health system in New Mexico, Presbyterian, opened another hospital. It is a big building, but has only 30 beds, so its additional contribution is not primarily general inpatient care. Interestingly, while the hospital is on the far southwest side of Santa Fe, its main medical center building is directly across the street from St. Vincent’s. This is obviously not a coincidence, as it is now firmly in the center of the area in which people are accustomed to coming for medical care, establishing itself, at least for outpatient care, as a competitor.

The point that I want to talk about is not hospitals in Santa Fe specifically but rather competition among hospitals in general. This is not a problem in rural areas and small towns where the struggle is, rather, to hang on to their hospitals at all (often with just a very few inpatient beds, and almost invariably losing money). It may not be a big issue for mid-size cities like Santa Fe. It is a huge issue in the major metropolitan areas where most hospitals and doctors are, and where there are the greatest concentrations of patients (the medical term for what in English we call “people”).

In these areas, you will find that almost every big hospital (or “medical center” or “health system”) has a Cancer Center. And a Heart Center. Centers for Orthopedic Surgery and Sports Medicine are also big. And in the last decade Neuroscience centers have joined the ranks of “must-haves” for each of these centers. Of course, if they deliver babies, they certainly will have a Neonatal Intensive Care Unit. What is wrong with this? Are these not important, serious diseases that can and do kill a lot of people and need treatment? Am I advocating against treating, say, cancer?

Not at all. But while there are a lot of people with cancer, it is a finite number. Was the new Cancer Center just opened to a lot of hoopla at St. Elsewhere necessary because there were many cancer patients for whom there was not room in the Cancer Center at Downtown General, opened a few years ago, and now would have an opportunity to receive treatment? Or, just perhaps, is St. E’s hoping to attract many of the patients, and perhaps the doctors, who currently use DG to instead use their new, glitzy, state-of-the-art facility? Is it a simple matter of competition for a limited market?

If we had a medical care system that was based on the health care needs of the population, we wouldn’t have such redundancy of facilities; we would have enough for all the people who need care and not unnecessarily duplicate services. Downtown General might have centers of excellence in cancer and orthopedic sports medicine, while St. Elsewhere might be great for heart and neonatal care. And, since we are fantasizing about a system in which the driving force is the health of the people, let’s throw in primary care and mental health. But that doesn’t happen. And, in our hypothetical city, even with both cancer centers (and perhaps yet another at Doctors Medical Center), there will still be bunch of people who cannot receive care because they have no insurance or their insurance is poor (i.e., they are “underinsured”).

So, in addition to creating excess capacity, which creates major excess cost, competition in medical care services doesn’t meet the needs of all the people. The true driver of the health system, making money, creates at least three major sources of inequity:

  1. The services are only for the well-insured. Entire groups of poorly-insured people are excluded. The services offered by these special centers may be highly-profitable, but only if they get paid. They don’t make money providing care to poor or uninsured or underinsured people. 
  2. The services offered are those that are highly profitable, and most often this is for particular procedures. Yes, cancer is bad. So is heart disease. But the real reason for these centers is that these conditions are very well reimbursed by insurers, so the hospitals (and doctors) make a lot of money (provided the patients meet criterion #1, of course). For example, while chemotherapy drugs are ridiculously expensive, of course, making money for the pharmaceutical industry, the hospital makes money on the “administration fees” which are far in excess of the actual cost of administration. In addition, the creation of new “centers” are often driven by a single procedure. No one had big “Neuroscience” centers until the procedure for inserting a catheter into a brain artery to pull out a clot was developed. THAT is reimbursed incredibly well! All of a sudden every big hospital needed a “Stroke Center” and started competing (and paying a lot of money for) “stroke doctors” (who might be neurologists, neurosurgeons, or invasive radiologists) who could do this procedure. But poorly reimbursed services? No matter how much the people need them, don’t expect lots of new centers for primary care. Or mental health. Or even general surgery. Essentially, we discriminate not only against those who are poor or uninsured, we discriminate against those who are unlucky enough to have poorly-reimbursed diseases!
  3. The third great inequity is obviously geographic. If you live in a major metropolitan area, and are well-insured, you can have your choice of which hospital is the best for your problem. You consult US News, ask your friends, read the ads. But if you are in a small town or rural area far from such a city, it’s a long trip. And not worth making if you don’t have the money.

What can and should we do? In the long term, we need to eliminate the motivation of hospitals to compete for profitable services by putting them on a global budget, which is what is done in Canada as part of their single-payer health care system, called (interestingly) Medicare. And, of course, we need to cover everyone so there are no people left out because they are poor and uninsured, a universal health insurance system, not “cover more” but “cover everybody”. And by long term, I mean as soon as possible.

In the mid-term, we must change policies to much less dramatically favor certain procedures at the expense of others. Pay more for mental health and primary care. Pay less for cancer drug administration and sucking clots out of brain arteries. Stop making it so much more profitable to do knee surgery than gall bladder surgery. The availability for any kind of procedure should be based on the need for it, not how well it is highly reimbursed. That is a totally backward motivation, and dangerous to our health. This can actually be done by federal policy simply by changing how (US) Medicare values and pays for services. Because Medicare is the largest payer, it sets the market rate. Private insurers may pay more, but it is always “multiples of Medicare”; the ratio of what is paid for one medical service relative to another is set by the federal government.

And while we’re at it, let’s eliminate the universal tax-breaks “non-profit” hospitals get for anything that they do, which are mostly things that will make them money! As evil in many other ways as for-profit hospitals are, they are at least required to pay taxes, and go to the capital markets for capital expansion. No donations to a hospital should be tax-deductible if they are going to be used for a money-making scheme. Again, in Canada capital budgets are separate from operating costs. A hospital is not motivated to increase its operating profit so it can expand and build, to better compete with others. It must apply for additional capital funds, which will only be available if they serve a health need.

In fact, this is something we can do in the near term. As citizens and donors, we can demand that the next opulent fund-raising gala for our local hospital is not for the purpose of expanding money-making services, but rather to expand those services to those who cannot currently access them. The money raised should be earmarked only for, say, providing cancer care at our great cancer center to uninsured people. That would be something for which tax-deductibility is justified.

It is outrageous that our health system in the US is structured to maximize money-making and not health. But as in so much else in our society, those making the money have a lot of it to use to exert their clout. It is going to take a massive national effort by the people to make the changes that we need to have.




John Steen, Immediate Past President, AmerHealth Planning Association said...

Dr. Freeman:

I welcome your pertinent comments on hospital competition. All of the pertinent points you make were once the basis for Community Health Planning and Health Regulation. That began in Rochester, NY in the late 1950s, and was enacted federally in 1974 (PL.93-641). I directed some of its programs, especially Certificate of Need (CON), during the two decades when it was still viable on the state level (1976-96). I’ve also produced keynotes for webinars presented by the Community Health Planning and Policy Development Section of APHA, and essays they published. In those years, community health planning democratically addressed all the public interest issues, and it was properly seen as a precursor for universal health care. It was a model socialist program, and exactly what we most need now to counter the capitalist assault on Americans and the world.

It is, of course, capitalism that we need to regulate in order to invest in people, not healthcare businesses. The reason that certain morbidities are well reimbursed is that their correction is most needed to return workers to employment, to producing ever greater wealth for investors.

And most of all, we always need to improve education so that Americans will better know which sources of news and commentary are truthful.

Everyone who understands this has a moral responsibility to use their understanding to inspire others to support the efforts of the Physicians for a National Health Program to get us there.

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