HOSPITALS/PHYSICIANS/POLICY: More data on specialty hospitals suggests the obvious

HSC is out with another study on local markets, and this time it’s looking at specialty hospitals. Not a new tune. HSC finds that purchasers in three local markets where there are plenty of specialty hospitals believe that the hospitals add to overall healthcare costs without improving quality. While purchasers may get lower prices from the new hospitals, they perceive that more procedures are recommended by physicians driving up their number of procedures and therefore overall costs. In addition, traditional community hospitals have been forced to compete by building new facilities, the costs of which get passed onto purchasers in the end, and have been raising their prices for services that specialty hospitals do not offer to compensate for their losses where the specialty hospitals have taken their business.

Yup, it’s all a scam. A war between docs and hospitals with the payers (and the taxpayer) picking up the tab. Of course, as discussed multotimes on THCB, if this was done within the context of some type of fixed budget, then maybe specialty hospitals or teams would be found to be the best way of delivering care. But in a FFS-based cost-unconscious system, they’re just adding to the death of health care affordability by a thousand cuts.

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  1. Let us look at it a different way. If there is a fixed health care budget( say 10%GDP), and you remove all restrictions on building specialty healthcare facilities, allow dual or triple tier healthcare with a basic catastrophic care for all, throw out trial lawyers, remove the “NOT FOR PROFIT” tax shelter for hospitals, eliminate payment differentials for procedures done in the office or hospital, stop lobbying of FDA and governement by drug companies, create a list of nearly free 200 essential drugs, allow people who need care to go where they please ( so long as the person treating them is properly qulified to do procedures!), include a national healthcare tax for catastrophic care services, you will see a levelling of the playing field, real marketplace dynamics, and plumetting of the cost of healthcare servies. A lot of poor countries are doing a better job of caring for the poor than USA. A good case study is India. 25 years ago, when I trained in India, it used to have a rotten healthcare system rife with corruption, castiesm, poor accountability (and that sector still exists!). With the advent of global market forces, The private sector was encouraged to compete with teaching hospitals and governement hospitals. Cost of care for specialty servies like high end orthopaedic surgery, ENT procedures, neuro-vascular surgery, ophthalmic surgery, cardiac surgery, dental and cosmetic surgery has actually dropped in recent years. The quality of service in the private sector has improved dramatically and patient satisfaction is comparable to that in the best centers in USA. Notably, philanthrophic services by the “best hospitals” has risen steadily, and many surrounding countries like Malaysia, Bangladesh and even western countries like UK are outsourcing complex medical and surgical procedures to India. Recentlym there was news about healthcare tourism from USA to India. There are absolutely no losers when market place is allowed to work without conditions. It is when the wise guys decide to “manage competition” that you start seeing poor results with rising costs, as in the USA. The new health savings accounts is a step in the right direction as the consumers are forced to pause and say “For what am I paying this kind of money?” I hope the next step will be true competition betwen the private and public hospitals. AHA needs to go the way of UAW, for the good of the US citizens!

  2. The big question is (or soon will be): will consumers (in a defined contribution world) be willing to pick up the tab for more surgeries and more cost per surgery?