Today’s headlines tell us that last night the nation’s hospitals agreed to contribute $155 billion over 10 years toward the cost of insuring the 47 million Americans without health coverage. According to the Washington Post “the agreement that three hospital associations reached with White House officials and leaders of the Senate Finance Committee is the latest in a series of side deals that aim to reduce the cost of revamping the nation's health-care system and to neutralize influential industries that have historically opposed such reforms."
We’re told that “about $40 billion would be saved by slowly reducing what hospitals get to care for the uninsured . . . . The reductions would probably not begin for several years, after a significant number of people have enrolled in the new insurance programs.
“For their part, hospital officials have an understanding that, if the final legislation includes a new government-sponsored insurance program, it will not pay at Medicare or Medicaid reimbursement rates, which the industry has long argued do not cover the cost of services.”
What Does This Mean?
I have a few questions. First, how can anyone promise that a public sector plan “will not pay at Medicare or Medicaid reimbursement rates” when we don’t know what Medicare and Medicaid reimbursement rates will be in 2010 or 2011?
We do know that there are plans to change the structure of reimbursements—bundling payments to doctors and hospitals, refusing to pay for preventable readmissions, paying bonuses to hospitals and doctors that approach benchmarks for efficiency set by hospitals like the Mayo Clinic. Medicare has been experimenting with bundling payments to the doctors and hospital involved in a single episode of care for quite a while. All of this is part of a larger plan to begin to pay for quality, not quantity of care. Presumably, a public sector plan will follow suit.
If we’re changing the way both Medicare and a public sector plan reimburses, then how can the public sector plan’s payments be compared to current Medicare fees? It would be an apples to oranges comparison.
Secondly, how can the Senate Finance Committee (or anyone) promise to limit savings in hospital spending to $150 billion over ten years? As the Post notes, some of the savings will come from the fact that, once virtually everyone is insured, the government will no longer have to pay hospitals billions to compensate for treating a disproportion number of uninsured and low-income patients. President Obama has already estimated that the government will be able to save $110 billion by reducing these subsidies. So hospitals are really only giving up $40 billion over ten years.
If health care reform is successful in providing incentives for physicians to keep chronically ill patients out of hospitals, we should be able to save more than $40 billion over ten years. If we refuse to pay for preventable readmissions and eliminate some of the unnecessary tests and surgeries that pad hospital bills, hospital spending should shrink further.
Of course, under universal coverage, some of the millions who have no insurance today will receive hospital care that they would not have received in the past—in part because they will live longer.
But, by and large, the care that the uninsured miss is primary care—not hospital care. Once they become so sick that they must be hospitalized, many do wind up in a hospital bed or an ICU—where they die. Arguably, if they receive primary care, they won’t need as much “rescue care.”
Overall, health care reform should mean spending more on chronic disease management and preventive care, less on hospital care.
Some will say that an aging population is bound to boost the need for more hospital beds. But, as I have written in the past, the baby-boomer generation will age, as they were born, over a period of decades. The change will take place between now and 2050, giving us time to adapt. Sweden has set a model: its population is among the oldest in Europe, and yet in recent years Sweden has managed to keep health care inflation flat—in part because it has made excellent use of Health IT to co-ordinate care.
Ultimately, if the hospital industry becomes more efficient—and provides better value for our healthcare dollars–total revenue should be falling, not rising. As a society, we do not want the hospital industry to be a growth industry.
I cannot help but recall Dr. Don Berwick’s story about visiting a hospital in Sweden where the hospital director bragged about how many empty beds he had. This meant he was doing a good job—patients were not staying in the hospital longer than necessary, and they weren’t bouncing back.
“Of course,” Berwick told me, “if he ran a hospital in the U.S. the man would be out of a job.” We reward hospital CEOs for growing the hospital industry. But perhaps, under health reform, we will begin thinking about things differently. Berwick suggested offering bonuses to hospitals with empty beds.
Returning to the deal announced today, let me suggest that it is largely symbolic. As a Hill staffer explained to TNR’s Jon Cohn, “"The more people are making deals, the greater the sense of inevitability that this will happen and the greater the momentum."
Cohn’s next sentence is telling: “And while these sources understood the [hospital] groups could simply walk away from the deals anytime–and declare, in effect, that their pledges of support were null and void–these sources noted that reformers, starting with the president, could do the very same thing.”
In other words, these “deals” are simply gestures of good will. Make no mistake: the gestures are important. They signal that lobbyists understand that health reform is going forward. They don’t want to be left behind. That is what is important. It’s becoming very unlikely that President Obama’s effort to make healthcare reform a reality will fail. But the lobbyists are not driving the train; they are simply scurrying to jump on board. No one has made them any promises in writing. And any handshake deals Senate Finance might make will have to be reconciled with a House version of health reform legislation.
Finally the numbers cited in these deals are not binding. At best, they’re hypothetical. If we manage significant reform—which means weeding out the unnecessary hospitalizations and procedures that put patients at enormous risk—we could easily reduce hospital spending by significantly more than $150 billion spread out over ten years.
Just one small example of how cuts can be made, while lifting the quality of care: at Intermountain Health in Utah, caesarian sections have been reduced from a national average of 1 in 3 to 1 in 5, and women admitted to Intermountain have spent 45,000 fewer hours in labor than would have been expected under previous protocols, saving over $10 million per year. Intermountain is one of those medical centers that would serve as a benchmark for bonuses.
In today’s dollars, hospitals consume more than 30 percent of the $2.6 trillion we, as a nation, now spend on health care—that’s well over $800 billion this year alone. Trim that by just 10 percent, and we have saved $80 billion that could be used for palliative care in the patient’s home– much less expensive and far kinder than death in an ICU. Or, the money might be used to hike fees for primary care doctors and nursing school teachers, so that we could train more nurse practitioners who could help staff community clinics. Some of the money might be funneled into public health, paying for gym teachers in public schools—and safe, cleaner schools.
Health care reform doesn’t just mean covering everyone—it should mean redistributing health care dollars so that those dollars are used to keep people well. Today, we’re spending billions on often futile attempts to rescue patients after the system has failed them. That must change.
The NYT ran a related piece.
http://www.nytimes.com/2009/07/08/health/policy/08health.html?partner=rss&emc=rss
The bottom line: What are interest groups getting in return for making all of these “concessions” and how much will that cost?
Are you still of the opinion that trying to address access (and cost simultaneously) via a public plan option is the best path for reform? Can you not feel the weight of it breaking under political and special interests? What do you really think we are going to be left with at the end of this process? IMO, mild payment reform, minimal CE efforts, mediocre outcome reporting via ARRA, and otherwise more of the same (likely with a higher price tag). And believe it or not, I’m an optimist.
Wouldn’t more aggressive payment reform alone drive better results–perhaps creating a faster avenue to pay for coverage for the uninsured? It’s all about the incentives.
Maggie:
Somewhat reminiscent of the sterile (voluntary) initiatives dubbed ‘WIN’ i.e., whip inflation now, of the 70s.
Bottom-line, the industry is saying we’ll kinds, sorta commit to restraining the growth rate a point or so and call them ‘savings’; there don’t ya feel better? We’re at the table and have a dog in the hunt!
Nice piece (as usual). How’d the NY premier go?
This is remarkably a deal that is the twin to the 80 billion the pharmaceutical industry agreed to pay not long ago.
The simple fact that our new administration has to ‘deal’ with such industries is a bit concerning.
Obama plans on signing a bill in October regarding health care reform, and enacting this reform by the end of August.
This deal lacks significant details at this time.
Baucus opposes a universal health care system, which exists in every developed country presently, even though the majority of U.S. citizens support such a system, including most doctors.
Baucus receives bribes from the health care sector that average nearly a million dollars a year. Obama receives higher bribes annually from the health care sector. This screams conflict of interest.
Under the current system, hospital reimbursement for Medicare and Medicaid is already ridiculously low. Too many hospitals are in the red. Is this a plan by the large hospitals to kill off smaller ones or those in middle- and low-income communities? Is there a statesman that will step forward and stop this madness?
If our legislators believe in this nonsense, they should scrap their high-priced plan for Obama’s legerdemain
I think that one of the important features of these various promises by health care groups to save money is an attempt to effect CBO estimates of costs. Although there have been many intelligent discussions of the fact that whether a program costs $1 trillion over ten years or costs $1.6 trillion is not very meanignful, there is a lot of focus on that question in congress and in the media. Being able to come up with a “new” savings of $155 billion allows reformers to “cut” the estimate by that much, bringing them closer to some magic number.
Meanwhile, I really wish that people would banish the phrase “Medicare and Medicaid” from their discussions. The two programs are not related, but lumping Medicaid, with its huge problems and very poor payment schedule, with Medicare is either accidentally or deliberately very misleading.
The “underpayment” factor for Medicare is somewhere between 3% and 7%, depending on the source of information. Many hospitals actually make a profit on Medicare. Most hospitals make a profit on most Medicare patients, since the shortfall is due to a small number of outlier patients who have costs well above average due to their health status. The question of hospital “costs” is an issue all by itself, since hospital “costs” include a lot of things, including deliberate excess capacity in OR’s to please surgeons, huge salaries for some executives, “Taj Mahal” physical plants, purchase of the latest and shiniest equipment mainly for PR reasons, and substantial advertising budgets.
This makes sorting out the question of Medicare payments and hospital costs a problem.
My opinion of Medicaid, as most readers of this blog know, is that it is a terrible program and should be abolished and replaced by a federalized health care program, ideally a strong federal option with subsidy for low income people.
Thanks Maggie–I love the idea of using savings to increase funding for palliative care. Of course, a big part of the need is not just home pallitive care services, but training the health professionals to provide these services, in particular physicians and nurses.
On the flip side, I always have doubts when we start talking about how to use future savings–none of the current dialog, especially these side deals, has made me particularly encouraged that there will be significant system reform that incentivizes the right care at the right time. I think that keeping a healthy (pardon the pun) skepticism is the right way to go to keep the decision makers’ feet the the fire.
This gets at something I’ve been wondering for a long time but have never gotten a solid answer on. Pat S does helpfully allude to it.
Medicare pays between 3% and 7% less than the average cost to treat a patient. But is this fixed? Is there a formula that Medicare uses to ensure they always pay between 3% and 7% less than the average cost of treating a patient?
Or is it true that if all hospitals cut costs, Medicare reimbursement would stay the same and suddenly, becoming profitable off treating Medicare is possible?
Is there a tipping point where if enough hospitals started making money off Medicare, the reimbursement would be reduced? Or is the reimbursement calculated independently of the costs reported by hospitals?
Witnessing hospital behavior, it surprises me how much they don’t act like normal businesses. Most businesses try to cut costs and increase revenue to make more profit. In general it seems the hospital industry is content with their cost structure and lobbies through state hospital associations to increase reimbursement while keeping process mostly unchanged.
Of course that argument doesn’t make sense if Medicare reimbursement IS pegged to hospital cost and would go down if all hospitals cut costs. Hence the question.
Mike C —
This is a complicated topic, but the answer to almost all your questions is no.
Medicare pays hospitals mostly by paying a set fee to cover the costs of a patient’s entire hospital stay, based on the diagnosis of the patient and some modifiers related to the patient’s underlying condition. This payment is supposed to cover the costs of taking care of the patient during the hospital stay, including all tests and care, covering everything except doctor’s fees. For example, a patient with appendicitis would be paid for with a set lump sum for appendicitis, out of which the hospital would have to cover all its costs of making the diagnosis, having the surgery done, and caring for the patient before and after surgery until discharge. The doctors – ER doctors, radiologists, surgeons, anesthesiologists, hospitalists or personal primary care doctors – would submit their bills separately and be paid separately.
Medicare payment is quite complex. It is recalculated frequently to reflect changes in management. It is different in each county. It tends to vary with cost of living, but also obviously has a political component — Dade County FL has the highest payment rate, despite being lower in cost of living than several other places, payments are higher in the Bronx than Manhattan, etc.
Payment is supposed to cover the cost of taking care of the patient. Medicare does not plan to have hospitals lose money, despite what some people might say. Some hospitals make money overall on Medicare. Most hospitals make money on most Medicare patients but lose on a few who require longer stays or more complex care, driving the overall payments into the red. Some hospitals have a lot of those patients and lose a lot of money.
The payment gap for hospital and Medicare is a nationwide average — all hospitals and all patients. Some hospitals make money, some lose more than average, hence the average. The payment rate is not set below cost by some amount and is actually supposed to pay costs. As I said, it does in fact pay the costs and some profit for most patients, but a few patients throw the overall payment into negative range.
Consequently, if some hospitals changed their operations and were able to make a profit, they could keep the profit.
It is highly likely that if all hospitals suddenly started making a profit on Medicare rates would go down, since Medicare is not supposed to be a huge profit center. But if all hospitals suddenly started breaking even on Medicare, rates would probably stay stable.
The best way for hospitals to make money on Medicare is to be located in a high payment area and have few patients who fall into the high cost zone. Another way is to actually go through the operation and make it efficient by avoiding running up a lot of costs that can be avoided. Still another way is to figure out ways to reduce costs for the high cost patients by using alternate approaches. The pilot study by SMDC in Duluth on management of patients with congestive heart failure who were costing the system a lot of money worked very well to cause most of those patients to stop generating a lot of extra costs by keeping the patients more healthy.
Another fact. Many hospitals and health care systems that have enough power to negotiate prices with private insurers – Medicare doesn’t negotiate – use the Medicare rate as a baseline and negotiate payments as a percentage over Medicare – for example, 175% of Medicare. Some reformers close to Obama have been floating the idea of the federal option paying 110% of Medicare, which would, based on the averages, swing most hospitals into the black for that program.
Finally, when you are listening to health care executives talk about payments and costs, make sure you are clear about whether they are talking about Medicare payments compared with costs or Medicare payments compared with the payment levels they have extracted from private insurers. The CEO of the Mayo Clinic recently gave a statement in which he reported that Mayo “lost” around 50% under Medicare. Closer questioning revealed he was talking about what Medicare paid Mayo compared with Mayo’s average collection from private insurers. He never did give an accurate number comparing what it actually cost Mayo to care for the Medicare patients.
This, in fact, highlights the big problem of figuring out what care for Medicare patients actually costs. There are a lot of charges that are fixed costs which are then applied to each patient, regardless of what they actually do. These range from bricks and mortar and equipment to advertising and salaries of executives. The costs of an OR you are never near are calculated to be part of the overhead in caring for you, and you are expected to help pay for a billboard on highway 95. There are other costs that are difficult to assess as well – for example a hospital may charge some rate for a CT scan, but since it is one scan of 35 done that day, in real life the marginal cost of that thirty-fifth scan – fixed costs like amortization of the room and equipment and payment of salary for the tech plus specific costs like payment for electricity, contrast, and expendable supplies – is much lower.
This is a great big mess, which is why people are so fond of the idea of capitation or other prospective payment plans, where a single lump sum is paid in advance for care of all patients and the health system has to figure out how to cover all its patients for that lump payment for the whole year. That has its own problems, which can wait for another time.
Thanks for replying in such detail Pat.
I understand DRG methodology including Wage Indexing, DRG weighting, etc., but there seems to be one sort of master number against which all inpatient reimbursement is figured. So say it’s $5000 for a unit. A DRG weighted at 1.1 DRG Weight would be paid $5500. Then say your county gives you another 1.1 bump because your county’s overall costs are slightly higher than other counties, then you get paid $5500 * 1.1 or $6050 for that service. I understand all that more or less.
But to calculate the original $5,000 as the payment for a DRG-unit, so to speak, do they compile cost report data among all hospitals to figure that out? It seems they must, in which case cutting costs would paradoxically hurt hospitals by lowering reimbursement. So to say “The hospital industry as a whole must figure out a way to make money off Medicare rates” is a contradiction in terms because as soon as the industry as a whole figured out how to do that, Medicare would punish them by lowering the unit DRG payment.
So you do well as long as you’re doing better than other hospitals, but if all hospitals improve it hurts the entire hospital industry.
And I agree it’s about as important to point out the difference between average and marginal cost in hospitals as it is in hotels. My friend is staying at a 3-star hotel in Dallas for $40 a night because they had empty rooms and as long as he’s covering marginal cost it’s better than an empty room/inpatient bed. Which is why hospitals do “make money” treating Medicare patients (and Medicaid for that matter) and is why they continue seeing them. If they could fill capacity with nothing but insured patients, they’d probably stop treating Medicaid and Medicare patients pretty quickly.
Thanks again for your detailed reply.
Mike C –
I tend to agree with you that if all hospitals moved well into the black on Medicare, Medicare would probably lower rates. I don’t see that as a bad thing, as long as the hospitals made enough to pay their costs, including debt service, and keep a small reserve.
Medicare was not designed to make hospitals rich, nor was it designed to drive them broke. For a while in its early days it erred in the first direction. Now it is stressing some hospitals. It would be nice to hit a happy medium, and there are a lot of smart people in Washington and elsewhere working on that problem.
One issue with that is what constitutes reasonable costs for hospitals. Most people would agree that hospitals should pay their employees fairly, should have facilities that are not falling down, and should have reasonable equipment. Many people do not think that hospitals should pay their CEO’s seven figures, have enough OR’s so that all surgeons can get operating times any time they want from 8AM to noon, should feature marble lobbies and hallways and rooms that would make the Four Seasons envious, and should throw out two year old CT scanners because something hotter has come along.
I have a friend who is a doctor for Kaiser in the Bay Area. The first time I saw his hospital, I was a little startled, since it was a lot closer to a Motel 6 than a Ritz Carleton. Kaiser is a prospective payment organization, so that when the money runs out there is no more. It also has to compete with other HMO’s and with private insurers, partly on price. That has obviously made them a lot more prone to watch their pennies. The hospital works fine, by the way.
BTW, the example you gave underestimates variation in Medicare payment by quite a bit. There is almost 100% variation in payments, with the top paid areas getting almost twice as much as the lowest. One of the reasons that health care in Minneapolis was so much more efficient than Miami in the now famous study is that the Medicare rate in Minneapolis is about 70% of the rate in Miami.
There is a bunch of stuff posted by the government about how DRG’s are set. Google “setting DRG rates,” and you will be busy for a week. I am going to review some of that myself, since I am less sure than I want to be about what system they are using to set rates these days. The Google results are also full of articles about ideas about changing the DRG rate system.
As long as Medicare is a smaller percentage of the total book of business, it’s probably not a huge deal that Medicare basically covers costs. It’s not great that it by definition is impossible for the hospital industry to make a profit off it, but not a huge deal.
But if you move to a situation where the public plan, which ultimately could cover a much much greater percentage of the population, is also paying Medicare rates or any rates that are so explicitly connected to cost of delivering care, then that’s a big problem to me.
It all adds up to I’m starting to understand how Medicare’s monopsony power in the market is a huge distortion. Hospitals aren’t free to set prices how they like so it basically insulates them from market competition in a way.
One last comment. It does seem like it would be better if hospitals were more restricted in what they were allowed to count as costs. I visited a hospital a couple weeks ago that literally had granite bowl sinks in the bathrooms in its business office. The building was one of the most impressive pieces of architecture I’ve ever seen. Baroque and Classical paintings adorning the walls wherever you looked. A restored century-old warehouse in perfect condition. And all this for a supposedly faith-based hospital system that is well known for its ability to play hardball and amass liquid capital. If the cost of creating that office is rolled in to the cost of care on a cost report, it’s travesty.
Mike C –
I am puzzled by why you think hospitals need to show a profit. Granted they need small surpluses and reserves to stay financially healthy, but most hospitals are nominally non-profit. I live in a state where for-profit hospitals are not allowed, and it does not seem to cause a problem – the state is a poster child for health care excellence and relatively low costs. When I lived in a state that allowed for-profits, they did not seem to have much impact.
Therefore I don’t see a problem with hospitals always operating just above (maybe 2% ) break even, as long as that was guaranteed on a year to year basis.
The issue of what are appropriate hospital “costs” is much more of a problem. I have no doubt that those granite sinks are built into the hospital overhead. I think almost everyone thinks that hospitals as a group have overshot the mark on that issue, but are puzzled as to how to change that without hurting the wrong hospitals or returning to the bad old days of certificates of need and all the mess that accompanied them.
BTW – news today has the Blue Dog Democrats in the House raising the issue of region to region variation in Medicare payments. That is a big issue out here among those who know and care about it; although the general public is blissfully unaware the issue even exists.
Dustin,David Weissman,
Sorry it has taken me so long to reply.
I did write a reply to the first few comments, but then managed to erase it.
This was discouraging.
Starting over:
Dustin:
I think that we will see a bill that paves the way for reforming how we pay, how care is delivered, and what we pay for.
I see the public-sector option as key because it will be able to do all of those things in the years ahead. In order to compete, private plans will have to follow its lead. (And they will—they don’t want to pay more than they have to for ineffective fee-for-service unco-orindated care.)
But as Dr. Don Berwick says in my film, “The U.S. health care system is the biggest ship ever built.”
We’re not going to be able to turn it around in a year–or two years.
Obama, Orszag and Zeke Emmanuel understand this.
This is why they say that their goal is to achieve universal coverage by the end of the President’s first term–not in 2010.
The legislation passed this fall will set the stage, and lead the way . .
If the Obama adminsitration has eight years, it will be able to accomplish a great deal.
When Americans finally decide that they want something (like healthhcare reform) they too often expect instant gratification.
It just isn’t that easy. As Dr. Atul Gawande explained in a New Yorker article a few months ago: “we can’t just flip a swith.”
We shouldn’t have allowed the current money-driven system to continue as long as it has. But we did. Now, it is going to take time to turn a $2.6 trillion industry around.
David Weismann–
Good to hear from you. I was talking to a medical ethicist about he need for palliative care just today.
(At her hospital, she, the head of the medical ethics committee– is the only palliative care. She is very, very good, but one person can’t do the whole job.)
And yes, we need to spend money on training palliative care physicians, nurses and psychologists.
I think this mean loan forgiveness for med students–and making some sort of course about death and palliative care a requirement.
Virtually all physicians have to deal with the death of patients (or not deal, but still, the patients die), They all need some training in this– and the importance of calling in palliative care specialists.
On what reform will and won’t do, see my reply to Dustin.
I have quite a bit of faith that the Obama adminisratin understands what needs to be down–and that, in the end, when push comes to shove, they will insist on legislation that makes a strong beginning.
But whatever legislation passes this October will just be the beginning.
In the meantime, most in Congress (including Baucus) are clueless about what needs to be done.
I am very hopeful that this fall, the White House will draw a line in the sand on what Must be done in this intiial piece of legislation.
Pat S. & Mike C. Dentist, Dan, Gregg
Pat, Yes, you are right– there is no reason why hospitals need to turn a profit. This is not their raison d’etre.
Traditionally, they have always been non-profit.
It was only in the 1980s, that someone had the idea that maybe he could turn a profit on a hospital.
Pat & Mike C. The vast majority of hospitals (85%, if memory serves) are not-for-profits. As such, they pay neither property taxes nor income taxes.
This is because they are supposed to be motivated, not by the profit motive, but by a sense of “Mission”
–to do whateverthey can to help lift the health of the population in the community where they are located.
From a business point of view, a 2% surplus is. as Pat suggests, what they need to remain stable–to provide a cushion in bad years.
But they don’t need a much larger profit margin. And they don’t need to be expanding, building new wings, atriums, waterfalls, which brings me to Mike C’s most recent comment.
Mke C–
You are completely right to be concerned about the granite washbowls. They are,of course, only a tiny cost, but this is the tip of the iceberg.
There has been a huge boom in hospital construction in recent years– even though we don’t need new hospital wings and beds in most of the country.
They are investing heavily not just in more beds, but in hotel-like amentiies which have nothing to do with keeping patients safe, protecting them against errors, and hopsital acquired infections.
And they are investing in redundant equipment–some of it the size of a football field– without even knowing if it works. (Here I am thinking of the newest treatment for prostate cancer.)
Also, more than two decades of reserach from the Dartmouth Medical School tells us that a huge number of Americans are hospitalized unnecessarily–and that this tends to happen in cities and regions where there are more hospital beds. Excess supply: “Build them and they will come.”
Pat S. — YOu’re entirely right: lumping Medicare and Medicaid together is very mistleading.
Medicare (care for those over 65) pays health care providers much more than Medicaid (care for the poor, which is adminsitered by the states.)
This is because when Medicare Med/icaid legislation was passed by Congress in 1965, Southern Congressmen made it clear to LBJ that they would not vote for any of it unless doctors and hospitals that trated the poor (largely black patients)were paid as much as those that treated patients over 65 (largely white–back then, relatively few black Americans lived past 65.)
That the legacy of racism still determines Medicaid payments today is mind-boggling.
Dentist –
A great many hospitals make a profit or break even on Medicare payments. Many of those that don’t are simply inefficient and extravagant. As Pat S. writes: “Many people do not think that hospitals should pay their CEO’s seven figures, have enough OR’s so that all surgeons can get operating times any time they want from 8AM to noon, should feature marble lobbies and hallways and rooms that would make the Four Seasons envious, and should throw out two year old CT scanners because something hotter has come along.
Pat continues: “I have a friend who is a doctor for Kaiser in the Bay Area. The first time I saw his hospital, I was a little startled, since it was a lot closer to a Motel 6 than a Ritz Carleton. Kaiser is a prospective payment organization, so that when the money runs out there is no more. It also has to compete with other HMO’s and with private insurers, partly on price. That has obviously made them a lot more prone to watch their pennies. The hospital works fine, by the way.”
Hospitals throughout much of Europe are also Spartan compared to U.S. hospitals– but their error and infection rates are lower.
They have their priorities straight.
Dan–
I’m not sure what you mean by “unviersal health care system” but I suspect you mean single payer.
Single payer is not what exists in most of the developed world.
Only the UK and Canada have single payer.
The rest of Europe has
hybrid systems that involve both private sector payers and a public sector payer– just like the plan the Democrats are proposing, And they plan to cover everyone–this is what “universal coverage” means.
The administration is asking various industries to step up and say how much spending can be cut in their industry.
He is trying to bring them into the tent, make them part of the process, with everyone giving up something.
They aren’t giving up enough, so eventually, we’ll have the squeeze the waste out of these industries. But anything that the administration can get voluntarily is all to the good.
Obama is not trying to spell out the details of what will and won’t be negotiable until he sees what people are willing to give up. Why draw a line in the sand and start a war if he doesn’t need to?
Why giving the conservatives ammunition by saying a public-sector plan has to be part of the final solution, and we’re not going to handicap it to make sure private insurers can compete?
The conservatives will distort anything Obama says now and use it to try to frighten people.
Obama is a patient man–one of his strengths. He will wait, see what others propose, see what they are willing to contribute adn then, in the end, step in and say: this is what we have to do if we want high quality, sustainable, affordable healthcare for everyone.
Don’t worry so much about Baucus. In the end, he will not be in charge.
Gregg– Good to hear from you.
They think they have a dog in the hunt. In the end, they may find that they are the foxes being hunted.
The NY premiere went for well, thanks.
And DVDs will soon be available–I’ll write about that.
Not sure if anyone is still reading this comments thread. It’s not that it’s so important to make money of Medicare, it’s that in a world where payment is tied directly to the cost of production, there’s no incentive to cut costs. We ask hospital to become more efficient, but they know all that comes from that is lowering their payment. So why would they? Now I understand why when you go to HFMA, there’s little talk about lowering cost of production, because hospitals know if they do that, Medicare cuts rates, and then all commercial payers follow suit.
So they’ll continue to keep their costs high and get more reimbursement per service.
Mike C–
Don’t be so discouraged.
Medicare has already made it clear that it is going to pay hospitals less for being inefficient.
Medicare has decided to stop paying for readmissions at hospitals that have a large number of “preventable readmissions.”
This is just the beginning.
The Medicare Payment Advistory Commission (MedPAC) has been recommending paying for quality and efficiency–and penalizing for inefficiency and poorer qualty –for a number of years.
Recently, Senator Jay Rockefeller presented a bill that would give MedPAC the power to implement its recommendatoins for Medicare. (At that point, I’m quite certain that those recommendations would also apply to a public-sector insurance plan–if not immediately, then quite soon thereafter.)
Presdient Obama has announced that he supports Rockefeller’s legislation.