Managed
care. HMOs. Government HMO
subsidies. For profit insurance
companies. The government Medicare
monopoly. Medicare Diagnostic
Related Groups (DRG) hospital
payment system. Medicare resource
based relative value system
(RBRVS) for doctors. For profit
hospital chains. State and
government insurance coverage
mandates. The growing uninsured
population. The politics of
health care reform. That about
sums it up.
Over
the
last
15
years,
hospitals
have
been
severely
impacted
financially
by
federal
and
state
mandates,
HMO
insurance
and
Medicare
reimbursement
changes.
The
result
has
been
an
understandable
change
in
focus
from
patient
care
to
the
bottom
line.
Hospitals
have
downsized,
reorganized,
closed,
sold
out
to
for
profit
chains,
contracted
with
physician
groups
and
insurance
companies
to
protect
market
share.
They
have
gutted
middle
management,
fired
technicians
and
cut
back
nurses
to
the
bone.
Patients
using
hospitals
notice
the
difference.
They
complain
that
care
this
year
is
not
as
good
as
it
was
a few
years
ago.
Doctors
are
getting
complaints
right
and
left
from
their
hospitalized
patients
and
are
passing
them
on
to
hospital
administrators. |
GOVERNMENT
PRICE FIXING:
DRGs,
RBRVS,
AND
THE
MEDICARE
MONOPOLY |
Medicare
was never meant to be a blank
check for hospitals and doctors
to overcharge for services.
With costs rapidly rising for
new technology and treatment,
the Health Care Finance Administration
(HCFA) initiated a radical
new price fixing scheme for
hospitals (DRGs) and for doctors
(RBRVS). Started in 1983, both
systems fixed prices for services
so that hospitals and doctors
cannot charge more than the
government amount allowed.
The DRG system begun in 1983
now pays a fixed fee for each
hospital stay based only on
the diagnosis. For example,
a hospital stay for pneumonia
(DRG no. 90) pays $ 2,724.04
whether you stay one day or
one month. No matter how many
resources are used, the payment
never is higher. Little wonder
hospitals cut back service
and move people out the door
as fast as possible.
The
RBRVS
system
started
in
1983
and
evolved
into
a complex
formula
to
fix
prices
for
every
interaction
with
a doctor.
For
example,
Medicare
pays
a global
fee
of
$600
for
a surgeon
to
take
out
your
gall
bladder
and
not
a penny
for
any
postoperative
care
for
the
next
thirty
days.
Little
wonder
that
some
surgeons
quickly
push
patients
back
to
primary
doctors
and
fall
short
on
follow
up.
This
government
price
control
scheme
creates
perverse
incentives
for
hospitals
and
doctors
to
limit
care.
Nonetheless,
Medicare
expenditures
are
continuing
to
rise
and
there
is
no
end
in
sight.
As
is
usually
the
case,
government
price
controls
never
save
taxpayers
any
money. |
DISCOUNTS
FOR MARKET SHARE:
HOSPITAL
HMO
AND
PPO
CONTRACTS |
Government
subsidies for insurance companies
to start HMOs began in 1973.
Intense competition ensued
as HMOs were started everywhere.
Low cost policies cut profits
and the dominance of for profit
insurance companies led to
consolidation. Now only a few
big survivors offer HMOs in
each marketplace.
Hospitals
were
forced
to
accept
steep
discounts
from
HMOs
and
PPOs
to
keep
their
beds
full.
Previously
they
had
charged
insured
patients
more
for
their
services
and
that
made
up
for
lower
Medicare
reimbursement
and
charity
care.
This "cost
shifting" dried
up
in
the
1990's.
Downsizing
and
diminished
service
quality
were
the
inevitable
result. |
CUT
TO THE BONE:
DOWNSIZE
AND
REORGANIZE |
| The
financial facts forced hospitals
to eliminate whole job categories.
Gone are EKG techs, blood drawing
teams, pulmonary therapists
and most middle management.
Nursing ranks were cut and
nurses given many of these
responsibilities. Inexpensive
nurses aides do what registered
nurses used to do and are now "managed" by
a nurse responsible for twice
as many patients. |
SECURITY
IN NUMBERS:
CONTRACTS
TO
CONTROL
THE
DOCTOR |
| Hospitals
not only contract with payers
(HMO, PPO, Medicare), they
increasingly contract or even
own physician groups to further
guarantee patient flow and
market share. A large HMO contract,
an oncology or a cardiology
group contract can fill up
an emergency room, surgery
schedule or x-ray department
leaving little room for private
patients who used to have better
access to these services. Administrators
are happy because they now
control patient flow and cash
flow no matter what the quality
of care may be. |
NO
WATCHDOGS:
THE
COLLAPSE
OF
QUALITY |
| With
the attention of hospital administration
and their contracted physician
groups on money, quality of
care has fallen by the wayside.
Public outcry against HMO abuses
has led to hospital patient
satisfaction surveys which
has been self serving and misleading.
Hospitals claim their patients
and doctors are all happy with
care when they ask the questions.
When outsiders ask, great dissatisfaction
is revealed. Neither the hospital
or the insurance companies
are adversely impacted financially
by dissatisfied patients when
the patients are locked in
by contracts. |
THE
BACKLASH |
Non-profit
physicians organizations like
APPA have sprung up to champion
the cause of patients and their
own independent doctors. These
organizations and their member
physicians are not under contract
to HMO insurance companies
or to hospitals. They are single
issue advocates and not compromised
like the AMA which represents
less than 30% of practicing
physicians, courts HMO membership
and is obliged to the government
because of contracts it has
with the Health Care Finance
Administration.
Physician
organizations
such
as
APPA
are
the
first
wave
of
physician-organized
backlash
against
the
excesses
of
government
control
of
health
care
and
for
profit
insurance
company
control
of
employer
provided
health
care.
Stay
tuned.
When
patients
also
unite
in
a non-profit
manner
to
assert
their
own
interest, "patient
power" will
change
the
marketplace
and
move
politicians
to
act
in
the
best
interest
of
patients. |
|
