Hospitals
Tuesday, October 7, 2008Medical Tourism Promoting Price CompetitionBy John LaPlanteCategories: HospitalsAn article in the Pittsburgh Post-Gazette about employer initiatives to lower health insurance costs has this interesting bit:
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Friday, September 26, 2008Will Illinois' Hospital Uninsured Discount Act Protect Patients?Legislators have attacked the symptom, but not the cause, of hospitals' price gouging By John R. GrahamCategories: Certificates of Need (CON), Hospitals, IllinoisBy a unanimous vote, Illinois legislators have passed the Hospital Uninsured Discount Act, which requires that hospitals charge uninsured patients their lowest rates. The Illinois Hospital Association (which supported it) has a good summary of the bill. Specifically, for patients in urban areas with household incomes up to 600% of the Federal Poverty Line ($127,200 for a family of four) or 300% of the FPL for rural residents, hospitals' charges will be limited to a 35% mark-up over cost, and the total must be no more than 25% of household income. Well, I suppose that's well and good, but it ignores the fact that hospital prices are undeniably influenced by government action - specifically confusing Medicare rules that determine payment (as I've discussed previously, p. 9). As well, it begs the question: what is the "cost" to which a hospital can add 35% to determine its fees? Hospitals are very complex institutions, and there are lots of ways to allocate overhead and depreciate assets. The law's answer is that the federal government determines the cost! The hospital must inform the state of the costs that the federal Centers for Medicare & Medicaid Services uses to fix its prices. Specifically, it will have to submit Worksheet C, Part 1 of its Medicare Cost Report to the state Attorney-General every year. So, instead of true competition and patient choice, we have different levels of government shuffling regulatory paperwork around. Illinois' legislators' hearts are in the right place. But instead of more price-fixing they would serve patients better if they repealed the state's Certificate of Need (CON), which keeps hospital competition low and prices high. CON gives the state the power to prevent innovative competition in hospital services by requiring a new entrant to prove that its services will be required before receiving a license. Needless to say, incumbent hospitals are skilled at blocking such applications, preserving their oligopoly. Illinois ranks 31st among the states in the Provider Burden of Regulation category in PRI's Index of Health Ownership, and 31st in the specific measurement of facility Certificate of Need. Professor David Dranove of Northwestern University has described how Illinois CON has resulted in corruption: incumbent hospitals do not challenge each others' expansions, but combine to block new entrants. This has resulted in old, overcapitalized hospitals, often situated far away from recent centers of population growth (Code Red, pp. 70-71). Furthermore, our SPN colleagues at the Illinois Policy Institute have been influential in demanding a stop to the CON job in Illinois. So, the lesson for Illiois is clear: Stop the price-fixing; stop the CON!
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Tuesday, September 16, 2008Massachusetts' Underwhelming Health "Reform"Emergency Room Overload Continues; State Simply Orders A Stop By John R. GrahamCategories: Hospitals, Insurance Regulation, MassachusettsMassachusetts' health care leaders continue to believe that they can solve problems by just ordering them to go away. The first step in this was the April 2006 Commonwealth Connector reform signed by Governor Romney, which simply commanded people to buy health insurance, and fined them if they did not. Subsequently, we've seen that this resulted in cost overruns, but no real improvement in access to health care. The latest evidence confirming that Massachusetts has seen no positive change is the continuing problem of hospitals' diverting ambulances to other hospitals when their ERs are overloaded. So, the Massachusetts regulator has simply ordered hospitals to stop diverting, according to the Boston Globe. Yesterday's order confirms a directive first published in July, forbidding any hospital from diverting ambulances unless the ER is on fire, or similar catastrophe. If only health reform were so easy, that it could be achieved by the stroke of a pen! Massachusetts' ambulance diversion statistics show that the Connector (which was supposed to ensure that everyone has health insurance, and access to primary care so they don't have to go to the ER) has had little effect. The state publishes the number of hours each month that hospitals divert ambulances. In 2005, the last year before the reform was enacted, ambulances were diverted for 860 hours. In 2006, it was 1290 hours. In 2008, it looks like it will be 2367 hours, an increase of two thirds over 1826 hours in 2007. It looks like all those newly insured patients are not really relieving the pressure on ERs. Repeat after me: the government cannot fix health care; it should only get out of the way.
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Saturday, August 30, 2008New York Times Funny Math on Massachusetts Health Care"Universal" Solution Costs Over Three Times More Than The Problem By John R. GrahamCategories: Hospitals, Individual Mandates, Insurance Regulation, MassachusettsOnly in government-run health care, or in the editorial offices of the New York Times, would it be considered a "success" to spend over $3 to solve a $1 problem. Dazzled by the lure of so-called "universal" health care, the NY Times editorial board enthuses that two thirds of the estimated 650,000 whom the Bay State now compels to buy private health insurance have done so. Critics, at Pacific Research Institute and other State Policy Network members have demonstrated that the Massachusetts reform, in fact, went off the rails very quickly. Curiously, even the figures reported in the editorial lead to the conclusion that this is a massively expensive experiment with miniscule results. The editorial reports that hospitals' uncompensated care dropped from $166 million in the first quarter of 2007 down to $98 million in the first quarter of 2008. That's $68 million, or $272 million a year. The state budget for the program is going to be $869 million this fiscal year. $272 million in savings for $869 million of costs: that's $3.19 of taxpayers' dollars spent for every dollar of uncompensated care avoided. And that is only the government spending, on top of the money ponied up by people forced to buy health insurance directly, that they did not previously think was value for money. It's time for some remedial math education in the New York Times editorial offices.
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Friday, August 29, 2008Sweet Deals for Hospitals, Thanks to GovernmentBy John LaPlanteCategories: Certificates of Need (CON), Hospitals, VirginiaOh to have a government-protected market share and, as a non-profit organization, pay no taxes. That's the status of many hospitals, which, as the Wall Street Journal noted in yesterday's edition, can soak customers. The hook of the story is about a hospital in Roanoke, Virginia that charges has a $4,727 for a colonoscopy, which is "four to 10 times what a local endoscopy center charges for the procedure." Carilion Health System even runs a venture-capital fund and some athletic clubs, and enjoys the status of being one of the largest employers in the area. In 1989, the U.S. Department of Justice failed in its effort to prevent a merger between Carilion and another system. Normally I'm skeptical of antitrust efforts, but then again, it's not as if new hospitals are free to enter the market. (See our posts on certificates of need requirements that states impose.) Says the Journal: "Originally set up to serve the poor, nonprofit hospitals account for the majority of U.S. hospitals. They are exempt from taxes and are supposed to channel income they generate back into operations, while providing benefits to their communities. But they have come under fire from patient advocates and members of Congress for stinting on charity care even as they amass large cash hoards, build new facilities and award big paychecks to their executives." It looks like there's a lot of rent-seeking at work, with hospital officials raking in big bucks and, according to some doctors, using its government-assisted market power to squeeze them out of business. And in a move worthy of robber-barons and company towns, a reporter who upset hospital officials with his coverage was assigned to another beat. But wait, there's more! A large contract for a new facility was let to ... a company owned by a member of the board. I'm all for companies being able to make a profit. Our country's economic success depends on it. But there's a difference between a private market and a free market. Unfortunately, government gets so involved that markets are seldom free, especially in health care and health insurance.
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Friday, August 15, 2008U.S. Index of Health Ownership 2nd Edition Is HereAlabama up, Utah down, New York still in the basement: Where's your state? By John R. GrahamCategories: Alabama, Alaska, Arizona, Arkansas, California, Certificates of Need (CON), Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Hospitals, Idaho, Illinois, Indiana, Insurance Regulation, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Medicaid, Medical Malpractice, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Retail Clinics, Rhode Island, SCHIP, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, WyomingPacific Research Instite has published the 2nd edition of the U.S. Index of Health Ownership, the only ranking of health care in the states that uses criteria of individual choice. Americans lack the basic freedom to make their own health care decisions. The Index measures the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, "own" the health care in their states. The lack of health ownership is a real problem. Almost half of the country's health care spending is in the hands of the government, instead of patients themselves. The other half is governed by regulations inflicted upon doctors, health plans and patients. The Index uses 24 variables to quantify how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. It also assesses the effect of medical tort on people's freedom to engage health services. Alabama, Montana, Nebraska, North Dakota, and New Hampshire finished in the top five, as the states that allow their citizens the highest degree of health ownership. Alabama leads the pack primarily because of a lightly regulated private insurance market, and good control of state government programs. Also, the state performs well on medical tort indicators. Alabama's regulatory environment for providers favors competition, and government health programs run more effectively than in most states. New York, Massachusetts, Rhode Island, Vermont, and North Carolina rounded out the bottom five, as the states in which the government has taken the most undue control of health care from its citizens. This is the second year that New York was in last place. The state suffers from government health-care programs that are out of control, a grossly overregulated private-insurance market, and almost completely uncompetitive provider markets. A full listing of all 50 states and their rankings is contained in the Index. The Index will give concerned citizens a good basis to demand reforms from their state politicians that will put American families in charge of American health care, instead of government and special interests.
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Monday, August 11, 2008Unbalanced Billing in California Hospitals: the Sacramento Bee Weighs InEditorial not sure who's the Bad Guy - but understands The Problem By John R. GrahamCategories: California, Hospitals, Insurance RegulationThe Sacramento Bee, our fair capital's daily newspaper, has editorialized on the issue of "balance billing," whereby ER doctors and hospitals which are not in a patient's health plan's network, send high-priced (and unexpected) bills to patients. Interestingly, although the editorial leans against the health plans, it approves of the state's new regulation forbidding doctors and hospitals from balance billing. The Bee notes that there are already laws in place that require health plans to pay "usual and customary" charges when a provider is out of network. However, this is a patch, not a solution. If there is disagreement, how can the state decide what "usual and customary" charges are? No wonder hospital prices are in cloud-cuckoo land! Lest we forget, the new regulation specifically chooses sides in favor of the health plans, and against the providers. As I've written before, there is no perfect solution to this question. Nevertheless, I have proposed binding arbitration as a better way than the state picking sides.
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Thursday, August 7, 2008A Grotesque Twist to the Los Angeles Homeless-Hospital SagaAnother Example of How Government "Help" Backfires With Tragic Consequences By John R. GrahamCategories: California, Hospitals, MedicaidOnly three days ago, I wondered what Los Angeles hoped to achieve by passing an ordnance forbidding hospitals from discharging ER patients without their written consent. As I noted, many homeless people would be happy to stay in the hospital for quite a while under such circumstances. I also blamed government laws and regulations for creating perverse incentives for hospitals. But I had no idea how perverse: the Wall Street Journal reports that hospitals and ambulance operators in Los Angeles are being charged with fraud for luring homeless people into hospitals in order to claim reimbursement from Medicare and Medi-Cal for "uncompensated" care. These unfortunate people "often received unnecessary and even harmful diagnoses or treatments". Then, they were sent on their way and the accounting department scratched up a bill to send to the taxpayer. Nothing can excuse this disgusting conduct, but let's not forget that subsidy and regulation are the father and mother of corruption. There's too much government, and too many layers of government, involved in Los Angeles' hospitals, preventing the community from holding them accountable. It's time for Leviathan to release his deadly grip on hospitals in the City of Angels.
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Wednesday, August 6, 2008Crisis In the ER? The Solution is At Hand! (It's Not Taxpayer Dollars)Convenient Urgent and Retail Clinics, plus EMTALA Reform Are the Prescriptions By John R. GrahamCategories: Hospitals, Retail ClinicsThree stories about the uninsured and emergency rooms came across the transom today. As I've written about in my analysis of the Schwarzenegger-Nuñez California Health Care Deforminator ABX1 1, the notion that the legions of uninsured crowding America's ERs is the cause of the health care "crisis" is myth. Nevertheless, today's stories remind us that this situation demands serious reform. First, a study estimating that illegal immigrants account for one quarter of uninsured residents. Obviously, in a country where we (bizarrely) insist on our employers as health insurers of first resort, people who are not legally employed are more likely to be uninsured - but health reform cannot change that. Second, a report from the Centers for Disease Control (CDC) concluding that the average ER wait has increased from 38 minutes to an hour over the past decade. Although 17% of the cases were for uninsured patients, 83% had private insurance or were dependent on a government plan. Guess what? The researchers determined that there was no increase in the number of cases that were "true emergencies." The "solution", according to a doctor who appears to speak for the American College of Emergency Physicians, is more taxpayer dollars to fund ERs. That's the wrong answer: As I and others have written before (search "EMTALA" in this blog), the government caused this problem through a law called EMTALA, which requires hospitals that accept Medicare patients to take care of anyone who walks in the ER door. More government money will only perpetuate this dysfunction. Instead, Congress needs to repeal EMTALA, or at least tighten it up so it only applies to true emergencies. (See this post about ER patients who get tired of waiting and leave!) The real solution is at hand: urgent clinics (similar to retail clinics, but staffed by doctors instead of nurse practitioners) where people unwilling to wait in a crowded ER can get treated for $60 to $200, according to today's Wall Street Journal. Convenient health care - no government needed!
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Monday, August 4, 2008New Los Angeles Ordinance Turns Hospitals Into Homeless SheltersWhen will hospitals stop appeasing government? By John R. GrahamCategories: California, HospitalsEnterprises that "collaborate" with government generally find that the costs come to outweigh the benefits. Those who seek a "seat at the table" often end up being the main course. (Thanks to Bridgett Wagner of the Heritage Foundation for the metaphor.) And in the end, you cannot buy politicians off; you can only rent them a little while. So, when will America's hospitals learn to resist, rather than embrace, government power? After decades of submitting to more state control over their operations and revenues, they are fast on the way to being reviled as mercenary profiteers, instead of caregiving institutions. I have focused on the problems at the old Martin Luther King, Jr.-Harbor Hospital in LA, but the City of Angels overall seems to be ground zero for so-called "patient dumping". Wait a minute: Isn't that what the Emergency Medical Treatment & Active Labor Act, a.k.a. EMTALA, a.k.a. the "Anti-Patient Dumping Act" of 1986, was supposed to stop? This law requires any hospital that earns revenue from Medicare to give "an appropriate medical screening examination" to anyone who "comes to the emergency department." Unsurprisingly, this government interference had unintended negative consequences. It has led to a run-up in hospitals' unpaid accounts receivable, because many such patients decline to pay. Although this is not as catastrophic as hospitals would like the government to believe, it is a problem and reinforces perverse incentives that create malformed hospital prices, as I discussed in my analysis of the Schwarzenegger-Nuñez health reform bill, ABX1 1. In the wake of media horror stories of unstable, wrongfully discharged, ER patients lost in the streets, Los Angeles has decided to pass an ordnance that will require hospitals to get signed consent before they discharge someone from the ER. Not surprisingly (according to the Wall Street Journal), many homeless people would be happy to stay in the hospital - getting "three meals a day", according to one insider. What will be the result of turning acute-care hospitals into homeless shelters? More distraction from their mission as hospitals, no doubt, and more "cost shifting" as bills for the new homeless wards are indirectly transferred to privately insured patients, who already pay a premium to subsidize Medicaid and Medicare. Will this absurd ordnance finally cause California's hospitals to rise up against the dead hand of government? I won't hold my breath, given Northern Californa's hospitals' willingness to succumb to San Francisco maor Gavin Newsom's shakedown of "free care" for his San Francisco Healthy Access Plan.
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