Over at  Our Own System, Drew reports:

“The last month has brought news of plans for new hospitals including this one, this one, this one, this one, this one, and this one.  There are more to be sure.

“Aging hospitals, demographic shifts, increasing use of technology, and the evolution of patient care have spawned the need for new buildings.

“Another story of new hospital construction is particularly intriguing: ‘An expansion at the University of Iowa Hospitals and Clinics will result in an increase in patient costs, but officials said they don’t yet know how much.’"

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This post was written by Niko Karvounis and Maggie Mahar

At a health care forum held last year in Las Vegas, then-presidential candidate Hillary Clinton declared that she was intent on "taking money away from people who make out really well right now” in order to fund health care reform. When asked exactly which fat cats she was referring to, Clinton responded: “well, let’s start with the insurance companies.”

Clinton’s sentiment—that private insurers are making out like bandits while our health care system crumbles—is part of the received wisdom these days, especially amongst progressives who believe that for-profit health insurance doesn’t add much value to our health care system. But the reality is that in recent years, private insurers haven’t been doing so well financially.

Consider United Health Care (UHC), the nation’s biggest private insurer. Joe Paduda of Managed Care Matters reports that UHC will be cutting 4,000 jobs as part of a restructuring plan that includes eliminating Uniprise, one of its major brands. Since last fall, UHC stock has plummeted from $53 to $22 a share. WellPoint, another huge private insurer, has watched its stock drop from $82 a share in 2007 to $49 a share in June.

As Robert Laszewski wrote on the Health Care Policy and Marketplace Review in April,  “Wall Street finally seems to be figuring out that the health insurance business is, and has been for years, on a long walk off a short pier. What’s sustainable about a business whose costs have continually exploded at 2-3 times the growth rate of the rest of the economy or the wage rate? Just where did Wall Street think this business was headed all those years the sector has been the darling of Wall Street?”

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When friend or relative is in an accident and lands in the hospital…what do you do?

Your first impulse may be to buy flowers, visit the patient, call friends and let them know what has happened –so that they can visit too.

“Block that impulse!” says Lisa Lindell, a reader and author of 108 Days, the harrowing story of what happened to her husband, Curtis, after he suffered second and third degree burns over 35 percent of his body in a work-related accident.

Curtis would spend 108 days in the hospital, and Lisa details the predictable but completely unacceptable chaos that followed: a lack of communication among doctors, dangerous errors, Mean Nurses, infections, battles with hospital administrators—all at one of the finest burn units West of the Mississippi. Unfortunately, this won’t come as a surprise to many readers. In too many cases, hospitals don’t have enough nurses. Doctors who are called in to “consult” don’t consult with each other. The lack of electronic medical records leads to mistakes.

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Everyone understands why Congress was so reluctant to cut physicians’ fees. Reimbursements for primary care physicians are very low—so low that 30 percent of Medicare recipients who are looking for a new medical home can’t find one. Cut fees, and fewer doctors will take Medicare patients. The AMA, seniors and the AARP are all up-in-arms. Few politicians like to disappoint this trio.

But why are so many Congressmen willing to cut Medicare Advantage? After all, one out of five seniors is in the program: Won’t they be upset?

The truth is that, as many seniors have discovered, Medicare Advantage fee-for-service (the plan Congress has now voted to phase out by 2011) is not turning out to be an advantage for them.

Here is what David Fillman, an International Vice President of the American Federation of State, County and Municipal Employees (AFSCME), which represents some 1.4 million workers, had to say about MA’s fee-for-service insurance when he testified before Congress in January:

“Insurance companies have targeted our employers for the hard sell, including offers to pass through some of the federal subsidies to state and local governments.” 

Fillman rightly calls the subsidies a “windfall” –Medicare pays fee-for-service Medicare Advantage 17 percent more than Medicare would spend if it delivered the services itself.

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When Ted Kennedy came onto the Senate floor, his colleagues cheered.

He was there to vote on the bill that would prevent a 10.6 percent cut to physicians who treat Medicare patients.

Just before Congress broke for the July 4 holiday, the bill missed the 60 votes needed to pass by just
one vote.

Today, Kennedy, who is battling a brain tumor, brought that vote to the Senate floor. “Aye,” the 76-year-old Kennedy said, grinning and making a thumbs-up gesture as he registered his vote.

Meanwhile, it appeared that Republican members of the Senate had been released to vote as they wished after it became apparent that the 60-vote threshold would be met. Pressure from seniors,  the AARP ,  and the AMA  had been mounting on members who voted against the bill June 26.

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Back in April, the Journal of Rural Medicine published an article that spelled out some of the ways in which rural medicine is a tough gig: Rural primary care physicians “tend to work longer hours, complete more patient visits, and have a much greater proportion of Medicaid patients” than urban physicians. Worse still, “[a]fter adjusting for work effort, physician characteristics, and practice characteristics, primary care physicians who practice in rural settings made $9,585 (5%) less than their urban counterparts."

So being a doctor in a rural region means less pay, longer hours (anywhere from 4 to 10 percent longer per week than urban doctors), and more Medicaid patients—none of which is particularly appealing to doctors.  (As I noted last year, reimbursement rates for Medicaid are abysmally low across the nation). At this point you may be thinking that this sounds like a warning to anyone even thinking about becoming a rural doctor.

Income

Not so fast. According to the Center for Studying Health System Change, the notion that the average rural doctor earns less is, well, what you might call an urban myth. While the Journal of Rural Medicine (JRM) looked only at primary care physicians and concluded that they make 5 percent less than their urban counterparts, CSHSC’s study of all physicians in rural practice tells a slightly different story.

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More and more doctors are fed up with private insurers.  It’s not just a question of how stingy they are, but how difficult it is to get reimbursed. Paperwork, phone calls, insurers who play games by deliberately making reimbursement forms difficult to interpret…

Some physicians have just said “no” to insurers.

What does this mean for patients? Business models vary. Some doctors charge by the minute. I recently read about a physician who punches a time-clock when the appointment begins. She has calculated that her time is worth $2 per minute. Fifty-nine minutes = $118.  Will you be paying cash, or by charge today?
Somehow, I think the meter would make me nervous. I suspect I might begin talking very quickly. But this is only one model.

Rather than charging by the minute, some doctors charge fee-for-service. In those cases, many physicians mark up their fees well beyond what an insurer would pay. But, they point out, they also spend more time with their patients. No one feels rushed.

A story in a New Jersey newspaper describes how physicians in Northern Jersey have begun following in the footsteps of “elite Manhattan doctors and are withdrawing from all insurance plans.” The article compares fees with and without insurance.  On the right, the fees that insurers typically pay for these services; on the left, the fees that Jersey doctors who don’t take insurance charge:

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This week, conservatives and liberals will face off on a question that has divided the Senate—and united the House:

• Should Medicare slash the fees that it pays physicians, across the board, by more than 10 percent?
• Or should it try to save money by trimming the subsidy that it now shells out to private insurers who offer Medicare Advantage?  (Medicare pays private insurers 13 to 17 percent more than it would lay out if the government program cared for seniors directly. In theory, patients receive extra benefits that equal the bonus, though skeptics say insurers are simply pocketing extra profits. )

The battle began, in earnest, on Tuesday, June 24, when the House voted 355-59 to block a 10.6 percent pay cut for physicians which was scheduled to kick in on July 1.

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By Maggie Mahar

Today, I posted something on TPM
Cafe that readers may find of interest.

I reprised some of what I
said about events in the Senate last week, but then went on to consider what this
means for Medicare reform. Perhaps reform requires a degree of “bi-partisan
statesmanship” that a highly polarized Congress doesn’t have.

 What that in mind, HHS
Secretary Mike Leavitt has made a startling proposal. I think it’s worth
talking about it. If you’d like to comment, post on TPM, or come back here.

By Maggie Mahar

Regular reader, author (108
Days), and patient advocate Lisa Lindell recently sent me a story that
aired on her CBS television affiliate in Houston. It’s a tale I have heard before, but what is
shocking is that no one has managed to find a solution to such a patently
unfair wrinkle in our health care system.” Even strongman California Governor Arnold Schwarzenegger has not been
able to the break the deadlock between doctors and insurers
over whether surgeons have a right to charge $2,000 to $3,000 an hour—and
whether the patient should be stuck with a bill that the insurer won’t pay.

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