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General News    H1'ed 7/28/13

Cost Curve: Hospitals Are Raising the National Healthcare Bill

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Message Trudy Lieberman

Re-printed with the permission of the Columbia Journalism Review

Laurels to two reporters for digging into how some hospitals and doctor groups are raising the national healthcare bill

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http://cjrarchive.org/img/posts/laurelrevised.png Two reporters on the hospital beat deserve a Laurel for recent work--both for taking a hard look at how hospitals are raising the national healthcare tab, the opposite of an oft-stated goal of Obamacare. The reporting of Jim Doyle, who covers hospitals for the St. Louis Post-Dispatch, and Phil Galewitz who does the same for Kaiser Health News, shows why it's important to dig, dig, dig beyond the press releases, the talking points, and, yes, the conventional wisdom.

First Doyle. A couple months ago Doyle and I were at conference and discussed the value of reporting on hospitals. We concluded that keeping the spotlight on these community pillars--including reporting on their records for improving patient safety, their marketing efforts, and their finances--is essential. After all, hospitals account for about one-third of US health expenditures. Doyle's recent profile of a new hospital in Poplar Bluff, a faded factory town of about 17,000 souls in southeastern Missouri, did just that.

Poplar Bluff Regional Medical Center, a state-of-the-art facility, serves lots of rural people, many with low incomes and high healthcare needs. Residents in this part of the state have some of Missouri's highest rates of obesity, diabetes, heart failure, and smoking. About 70 percent of the hospital's patients are on Medicare or Medicaid, making the hospital fairly dependent on federal dollars. The number of uninsured and underinsured patients keeps climbing. Missouri chose not to expand Medicaid coverage as part of Obamacare, which means that the poorest of the poor there have virtually no options for insurance coverage and will continue to use the expensive ER for their care. Also, Doyle reports, "employer health plans are increasingly requiring that employees pay high deductibles, which results in people putting off elective procedures and diagnostic tests due to the high cost of care."

All this squeezes the hospital bottom line, of course. When that happens, the hospital raises prices for services to make up for the shortfall. Doyle consulted the many websites that examine hospital costs and quality. Poplar Bluff has some of the highest charges in the state for common procedures such as cardiovascular and orthopedic surgery. The hospital also has high labor costs. It's not easy attracting top medical talent to rural areas, a complaint heard from many rural hospital administrators. "Sometimes we have to offer quite an extensive package to get a physician to consider coming to Poplar Bluff, Missouri," the hospital's chief executive, Charles Stewart, told Doyle.

Doyle concludes that Obamacare's success or failure "will depend in large part on the efforts of rural hospitals such as Poplar Bluff to treat the poor." Without Medicaid expansion, charity care and bad debt will continue, and rural hospitals must find new ways to triage their services and treat the poor and uninsured. "To bridge that gap," Doyle concluded, "hospital charges would surely increase for self-pay patients, and individuals covered by an employer's health plan would need to chip in higher insurance premiums." In other words, medical costs would push up premiums, a fact of healthcare life that has been hard for the public to understand.

Galewitz raises more questions about the contributions of hospitals (and doctors) to healthcare costs, with a piece describing freestanding emergency departments that are not physically attached to a hospital, but which offer most of the same services and treatments as ERs in regular hospitals do. They are close cousins of urgent care centers, but are much more expensive places of healing, charging insurers double or triple the amount per patient as an urgent care center or doctors' office, since they are allowed to charge an expensive "facility fee," like hospitals.

A few years ago, Galewitz exposed a new hospital practice--using advertising to sell emergency room services, in an attempt to reel in patients who contribute higher profits. Emergency care is some of the most expensive care around, and the hospitals' selling job ran counter to one of the goals of health reform that the public heard has many times--to keep people out of the most expensive places of care. Now Galewitz dissects this new twist in the medical establishment's ever-increasing quest for profits by zooming in on Houston, where there are 41 freestanding ERs in the metro area and 10 more on the drawing boards. Nationally, there are more than 400 operating now, double the number four years ago.

Big hospital chains like HCA are opening these add-ons to their product lines in states like Florida, Texas, and North Carolina. Many are also owned by emergency room doctors, who see them as more profitable than urgent care clinics. Why wouldn't they, when they can do most of the same work and get more money for it? They are growing like "wildfire," Galewitz reports. Insurers have little power to stop patients from using these facilities, "because by state law [in Texas], they must pay for ER coverage anytime a patient perceives they have an emergency, regardless of whether that turns out to be the case."

Freestanding ERs have no reason to contract with insurance companies and give their policyholders discounts for their services. Patients apparently like the convenience of these facilities--shorter wait times than in traditional ERs, and if they must pay a copayment of only $50 or $100 to use one, who can pass up the chance to get patched up quickly and pay almost nothing? "You can never have too much care for patients," Rhonda Sandel, CEO of Texas Emergency Care Center, told Galewitz.

What might come next? It seems owners of some freestanding ERs are worried that insurers will eventually change the game and cut payments to facilities not affiliated with hospitals. So a few have begun to convert their facilities into micro-hospitals with a few beds to treat patients with drug problems or those who are terminally ill.

Shara McClure, a vice president of Blue Cross and Blue Shield of Texas, neatly summed up the dilemma of America's profit-driven healthcare system: "When they build it, people will come and use it. But they need to know it's not free."

Doctors and hospitals hold the keys to the pearly gates of healthcare cost-control heaven, but these reports from Doyle and Galewitz suggest they may not be using them any time soon.

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Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review where she blogs about health care and retirement at www.cjr.org. Her blogposts are at http://www.cjr.org/author/trudy-lieberman-1/ She is also a fellow at the Center for Advancing Health where she blogs about health at (more...)
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