One of my blog readers shared an email he received from Doctors For Medical Liability Reform about Katie Couric’s CBS Evening News broadcast from a maternity ward in Philadelphia, (my Medical School Hometown), days before escalating medical liability concerns contributed to forcing the ward to close it’s doors. The story also goes on to tell how with Medicaid reimbursement, hospitals are losing money on every Medicaid delivery. The story hook at the onset was that the problem why women were having a hard time finding a place to give birth was all about …. dramatic pause… MONEY.
No foolin’! Healthcare is all about money and money is all about healthcare in the BUSINESS of medicine. Hip replacements at my hospital, under Medicare payment guidelines, cause my hospital, and YOUR hospital, to lose money. In fact, one year I remember my hospital giving all the physicians a report on how much money they generated through medicare. I was amazed to discover only one patient, out of over 100 Medicare admissions I admitted as a surgeon to my hospital, created actual profit for the hospital.
That’s the reality of public funded healthcare. It’s designed to minimize, (read: eliminate), profit. Sure, we hear about healthcare fraud in headlines, but when you add it all up, the amount of money hospitals actually LOSE in a year most likely overwhelms the amout of money paid out to “fraudulent” claims.
If you ran a business… let’s say a grocery store… and priced a box of cereal you pay $1.00 for wholesale at $2.00, you’d expect to make a dollar profit. (Less overhead costs to run your business, OF COURSE). When a buyer uses food stamps, (actually in South Carolina they’re not technically stamps/coupons… .it’s a credit card styled process), and pays you $2.00, (additionally, the food stamp recipient doesn’t pay state sales tax in South Carolina… there’s another bit of savings!), when you get your cash back as the store owner, you get back the full $2.00 from the food assistance program.
That’s not how it works in healthcare. If the bill for delivering a baby is say, $2,000.00, and the “overhead” cost of labor/supplies/drugs etc. is $1,000.0, and Medicaid pays the hospital $800, the hospital just lost $200. At this rate, it’s kind of hard to compensate for “volume” sales! Every time you deliver a Medicaid baby, under this arrangement, you’ll lose money.
Again, let’s look at Medicare for a hip replacement. The hospital may be paid $8,000.00 for a hip replacement patient’s admission. Now the actual hardware that is installed into the patient as a hip replacement joint could cost, say $5,000.00. By the time you pay for ALL THE OTHER OVERHEAD COSTS, the bill will exceed $8,000.00 and you’ll lose money. (Actually, I’ve calculated, using DRG payments a few years ago, how the hospital could actually MAKE money with patients by avoiding hip replacements. Here’s how it works. Mrs. X can’t walk to the end of her driveway to the mailbox to get her mail. But otherwise, she really doesn’t walk too much. Rather than getting a hip replacement, the hospital collects the $8,000.00 from Medicare and then issues Mrs. Smith a golf-cart. The hospital gets a nice golf-cart, at a bulk volume discount, and keeps a nice supply of multiple colors available. The golf-cart is waaaaayyyy less than $8,000. Using the money left over, the hospital also secures an extended warranty on the golf cart that exceeds Mrs. Smith’s life expectancy by say 20%. The hospital still has profit left over, which it keeps to offset the other losses incurred by Medicare patients. Mrs Smith can now take the golf cart to the mailbox, the hospital didn’t lose money, and Mrs. Smith won’t sue the hospital for malpractice if she had had an adverse outcome from surgery, AND there’s a lot smaller chance of getting DVT riding around in a golf cart than if she had surgery. WIN WIN? )
Of course, this woudn’t work. The golf cart retailer trade group would cry FORE…. er…FOUL!!!!! and the trial lawyer associations would protest they don’t make enough money suing golf cart issuing hospitals that are avoiding hip replacement surgery.
So if you had your option, what business model would you like? Baby Delivery Business? Hospital Business? Grocery Store Business?
Exactly. That’s why you see so many new grocery stores opening up, and so many hospitals closing down or limiting services, like delivering babies.
How long do you think grocers would stay in the healthcare business?
AND, most heartbreaking of all, are all the disillusioned physicians and other “dots of healthcare” who wanted to go into the “practice of medicine” to “help people.” Now they’re embroiled with “business of medicine” issues that make it financially prohibitive to run a “business of healthcare”, (malpractice costs alone for Pennsylvania obstetricians was cited in the report as $160,000.00/year). Incredible and geometrically increasing malpractice premiums are a huge issue, (see the earlier post on changing tort law to contract law), but the reality is that healthcare is not a practice to take care of people, but a BUSINESS that needs profit to run, like ANY OTHER BUSINESS, so the “dots of healthcare” can take care of people who need healthcare.
Something’s gotta give. But before that ultimate “something” happens… the patients that need the care the very most, will be the first to suffer.
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