Are We Willing to Accept a Two-Tier Hospital System? By Maggie Mahar

Frequent THCB contributor Maggie Mahar returns today with another of her "Inside Baseball" posts on the healthcare industry. Is the recent boom in hospital construction a sign of a healthy and vibrant industry as many prognosticators have argued, or a symptom that something is going very wrong beneath the surface. This piece first appeared at Healthbeat, Maggie’s blog at the Century Foundation.    

Yesterday, I wrote about the hospital-building boom and suggested
that we may not need it—and more to the point, we may not be able to
afford it.

In my description of how hospitals are adding costly amenities like
waterfalls and all-private-rooms in order to woo well-heeled,
well-insured patients, I suggested that the money might be better
invested in computerized medical records or Level I trauma units. (In
some parts of the country, trauma units are spaced so far apart that if
you are in a car accident, there is a real danger that the unit will be
too far away to be of any help.)

Barry Carol responded, agreeing that safety should come first, but
also arguing that the private rooms help prevent infections. As for the
waterfalls, he noted that “while they may make good journalistic copy
as illustrative of frills,” given the high cost of hospital
construction “they probably get lost in the rounding as a cost factor.”
See his comment here.

Because Barry had raised a number of good points, and because the
hospital boom is such a large and crucial subject, I decided to return
to it today while responding to his comment.


I’m afraid the waterfalls are more than good copy for journalists..
Similar amenities are being included in hospital construction across
the country–and it adds up.

Here are a few examples from a 2006 piece in The Washington Post:

“Walk past the free valet parking . . . and into the light-filled
lobby, where soothing tunes waft from a baby grand piano and macchiatos
are brewed at the coffee bar…Only the patients in wheelchairs give away
that this is a hospital.

“All five of Montgomery’s community hospitals are in various stages of
expansion. As they increasingly compete with each other . .
.flat-screen televisions and CD players are standard in many rooms at
Montgomery General in Olney.

"We want [patients] to leave here and then brag about it," said John
Fitzgerald, president of Inova Fair Oaks. "There’s a competitive nature
to health care, and we want to be first. And part of that is the

"This trend has its critics," the Post notes, "including industry
consultants who caution hospitals to remember that their primary
mission is to treat patients . . .Some hospital administrators, too,
are leery of overspending on frills. Brian A. Gragnolati, president of
Suburban Hospital in Bethesda, says: ‘I would rather put money into
nursing care and staffing and making sure our doctors are there,’ he
said. "At the end of the day, it’s about taking care of patients."

""As some of the Washington area’s hospitals expand at record levels
and add amenities, others don’t have that luxury.. . They are buckling
under the burden of caring for the uninsured, raising concerns about
widening disparities in health-care facilities.”

The May/June 2006 issue of Health Affairs offers a window into
the surge in the cost of hospital construction as hotel-like amenities
help drive up costs: : “Modern Healthcare magazine reports that costs
for completed acute care hospital construction rose from $9.2 billion
in 2000 to $13.0 billion in 2004, and costs for construction that broke
ground or was in the design phase increased from $30.8 billion in 2000
to $54.0 billion in 2004.”   

The Health Affairs article continues by reporting on 1,008 interviews
done by the Center for Health System Change in sixty randomly selected
and nationally representative U.S. markets. The Center has been doing
these interviews every two years for ten years.  In the latest round of
interviews, they asked questions that explored the kinds of
construction projects hospitals planned, had under way, or had recently

First, the researchers confirmed the move to private rooms, but
questioned whether this was really about preventing infections:
“Although the movement to private hospital rooms partly reflects
concerns about infection transmission and patient privacy, by and
large, it reflects hospitals’ desire to provide a potentially costly
patient amenity to attract or maintain business.”

If you think about it many of the most serious infections acquired in
hospitals are not air-borne; they are transmitted by hospital personnel
who haven’t washed their hands, or by equipment that hasn’t been
cleaned properly. Being in a private room offers no protection against
these infections. 

Here I would add that since very few insurers pay for private rooms,
when a hospital builds only private rooms it is turning itself into an
exclusive hotel for those who can afford it. Particularly if a patient
is seriously ill, and stays in the hospital for two or three weeks, the
extra $300 to $500 a  night of a private room—plus a deductible and
co-payments for other items – is likely to be more than many
middle-class patient can  shell out.

    > Finish reading Maggie’s piece over at TCF.org

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UNIVERSAL HEALTH CARE By HOWDY FROM TEXAS – Oct 18th, 2007 at 1:48 pm EDT This sounds like a great idea, but what happens if you get the government in charge of your health care and all of a sudden the democrats aren’t in office, Do we real want the republicans in charge of our health care ? I mean if I am 65, drawing social security and am a registered democrat and the republicans want to cut back on spending, who do you think is going to be denied coverage ? Just something to think about.

Sara Rothstein
Sara Rothstein

BostonDoc- I thought your post was great. Particularly the “donde no hay doctor” line. In the interest of full disclosure, I should mention that I work with 1199SEIU, helping Boston’s hospital workers join together as a union. …And so it will come as little surprise that I agree with many of your statements. The “Mahogany Floors” of institutions like the MGH (which I’m guessing is what you were describing, though I might be wrong), are a symptom of a larger problem: The emphasis of cosmetically making it appear as though care is being delivered, while profit motives undermine the quality… Read more »

Steve Beller, PhD

Thanks for the link to the MedPac article, Maggie. It’s very well done!

Maggie Mahar
Maggie Mahar

Rob– You put it very well: “simulacrum intended to imply care.” On healthcare pricing: the reason health care prices are not uniform (and transparent) is becuase traditionally, hospitals have always engaged in cost-shifting, charging insurers more than “what it cost them to provide the care plus a reasonable margin,” in order to make up for the money they are losing on charity cases, uninsured patients and Medicaid (which usually pays less than cost–as if somehow, caring for poor people is less expensive.) Meanwhile, private insurers compete for discounts, and some get bigger discounts than others (depending on how much business… Read more »


First, let me say it’s gratifying to see cogent discourse on this and other topics. Second, I will make an observation: waterfalls and pianos, if they were a symptom of a focus on care, would be naturals. There’s no doubt that their calming influence is tangibly. I fear, though, that instead they’re trappings of care, emperor’s clothing of care, simulacrum intended to imply care. That we’re trying to trick patients into thinking they’ve had a great experience instead of, oh, say, actually giving them a great experience is a symptom of this self-centered age in which how we feel about… Read more »

Barry Carol
Barry Carol

Peter and Maggie, I guess we can justify the education related discussion based on the correlation between poor education and poverty and then poverty and below average health status and life expectancy as well as above average infant mortality. Peter – I don’t know anything about the OTF, but it sounds like the organization has a lot in common with the NEA. My problem with the NEA boils down to rigidity and inflexibility. Under union rules, it is extremely hard to get rid of incompetent teachers. In most districts, salary guides are based on two factors – years of seniority… Read more »

maggie mahar
maggie mahar

Peter– Perhaps we shouldn’t be talking about education on thehealthcareblog-or perhaps we should. People who have thought long and hard about improving the nation’s health have come to the conclusion that improving our public school system could be as important as making sure that everyone has heatlh insurance. (Not that it’s an either or.) I agree that money can’t create good teachers. But higher salaries would draw a larger pool of bright capable applcants, and then those with the dedication and creativity to be excellent teachers could float to the top of that pool. That’s one reason I like the… Read more »


For those interested in the very dangerous effects of lead poisoning and child/adult behavior you should Goggle the work of Rick Nevin, economic consultant, Ellen Silbergeld, professor, environmental health sciences, Bloomberg School of Public Health, Johns Hopkins University and ,Herbert Needleman, professor of psychiatry and pediatrics, University of Pittsburgh. Rick Nevin has graphed the rise in crime in the 60’s-70’s with the rise in exposure to lead gas and lead paint which peaked about 10 years earlier. When those lead exposed children reached the prime crime years of about 20+ then the effects of this poison became epidemic. There is… Read more »

maggie mahar
maggie mahar

Boston doc–
You posted your very interesting comment while I was responding to comments above.
Thank you–you provide a real window on what those private rooms can mean,as only an insider can.
In my post on my blog (www.healthbeat.org) I noted that some older patients (who have more experience with hospitals than the rest of us) prefer a semi-private room because they want a roommate (or the room-mate’s visitors) to be there to help them if they get into trouble. (They know that ringing for a nurse does not mean that a nurse will come.)

maggie mahar
maggie mahar

Tom, Steve, Peter, Barry, and Catron– Tom, you are right–in some ways we have a 4 or 5 tier system. What I would like to see is a universal single tier health care system that is so good that even very wealthy people would not normally feel a need to go outside that system. (This is what Germany has. People who earn over a certain amount have the option of buying private care, but only about half do.) Steve, I agree completely that we need a system that rewards efficiency. Lower cost and higher quality go hand in hand. (Fewer… Read more »


Maggie’s right-on regarding the disconnect between hospital frills and quality of care. This is pretty obvious even at the single-institution level. I completed my training in a certain prestigious Boston hospital not too long ago, and the joke among the medical housestaff was that the expensive private floor was “donde no hay doctor” (“where there is no doctor”…named after the famous 3rd-world medical manual). The other joke was “thank god the [expensive private-room floor] is located near a hospital.” Patients paying for the extra space, fine dining, and hardwood paneling routinely got the very worst nursing care in the entire… Read more »

Barry Carol
Barry Carol

Maggie and Peter, Maggie – I am interested in your thoughts about the best way to deal with the problem of significant excess hospital capacity in a city like Cleveland. As we have found in NYC, it is extremely difficult to close outdated and unneeded hospitals, in part, because in means a loss of jobs with incurs the wrath of the SEIU and other unions. New York finally appointed a commission to come up with a plan, similar in approach to the Base Realignment and Closing Commission (BRAC) used by the Pentagon to close unneeded military facilities. State and federal… Read more »


Barry, if financially well off people were really interested in improving ALL schools they would not support vouchers that take money from one school and give it to another. But private school users largely hate supporting public school when also paying for private and want some tax dollars to pay for their private education as well. In NC we had a similiar decision to the one you point to in New Jersey, it is called the Leandro Decision. The state was ordered to pay millions to “equalize” funding to poor county schools. As yet the state has not fulfilled the… Read more »


Maggie, on the subject of hospital reimbursement, you’re rather like a nun discussing sex. These random selections from your comments demonstrate what I mean: In these cities, as hospitals compete for Medicare dollars, more patients are hospitalized, and patients spend more time in the hospitals. You’re still not getting the DRG concept. In terms of reimbursement, it doesn’t matter if “patients spend more time in the hospitals.” A hospital gets paid the same amount regardless of the patient’s length of stay. If the University hospital in Cleveland doesn’t charge more for the private rooms, it has to shift that expense… Read more »

Steve Beller, PhD

Where does value to the patient/consumer (high quality care delivered efficiently) come into the picture? How does any of this reward providers who treat their patients cost-effectively? While I have no problem with amenities, per se, I do have a problem with our country’s reluctance to make radical transformations in our broken healthcare system and, instead, we focus on making insignificant gestures. What we should be focusing on is making high-value patient-centered healthcare–which consists of top quality care delivered efficiently and at a good price (i.e., cost-effectively) over a person’s entire lifetime–a reality, instead of reward waste (over-testing and over-treating);… Read more »