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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22 replies »

    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.

  2. 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 of care:
    1. There is the tendency to improve the appearance of rooms (not just in the private floors), while paying inadequate wages to service and technical workers in the hospitals;
    2. There is a tendency to ignore the labor shortage and short staffing that this creates, because the inadequacy of staffing isn’t immediately visible to a patient or their families;
    3. And, having learned that labor shortages caused by low wages haven’t caused a downturn in business, many hospitals throughout the U.S. then make short-staffing a deliberate part of their business plan.
    What you wrote really speaks to why those of us in the healthcare union movement got into it in the first place. Without the protection of having joined together, far too few healthcare workers feel safe to tell the kind of stories that you just told. And when those stories aren’t told, the issues are invisible.

  3. 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 their patients bring to the hospital)
    The tradition of cost-shifting, btw, goes back to the fact that, until the 1960s, many doctors charged their poor patients significantly less than they charged their wealthy patients. In 1950, a poor patient might pay $2 for a house visit while a wealthy patient paid $10. Physicians thought this was fair, even though they lost money on the poor patients.
    Today, if prices were made transparent and uniform, the poor would probably suffer most (losing discounts they sometimes get.) The real answer of couse is to insure everyone at an equal level so that everyone can
    afford to pay the same amount for hospital services. . .

  4. 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 something is more important than the thing itself. We FEEL cared for, ok. WERE we? Probably not so much.
    I’d like to see a return to the idea that care isn’t a product, but rather an intentional act.
    I also have a very very naive question. Why isn’t healthcare priced on a flat “cost-plus” basis? Why wouldn’t that work, especially in a not-for-profit hospital? That would guarantee a level of transparency that couldn’t be beat, and would point exactly to where economies should be looked for first.

  5. 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 and amount of education – Masters Degree, Masters + 30 credits toward a doctorate, PHD, etc. The union historically resisted both merit pay and paying a premium for scarce skills such as math and science teachers and certain categories of special education teachers. Of course, from a union leader’s perspective, the current salary guide criteria are objective, “fair,” and easy to understand and explain to the membership.
    I appreciated the point you made about students learning in different ways and responding to different teaching techniques. This is one of the key arguments made in favor of vouchers. It’s not just an individual teacher that may be able to employ different techniques with different students. It’s the fact that some students may need a completely different school experience. I’m sure many students can thrive in a wide variety of settings. Others, however, need lots of structure and discipline, perhaps even including school uniforms. Still others may need more individual attention that requires either small class size or the availability of tutoring and other extra help. A variety of competing schools is more likely to be able to accommodate a diverse student population than a one size fits all system.
    Maggie – There is no question that the challenges connected with educating poor children, especially in the inner cities, are huge. Sending kids out to the suburbs might not work so well either. If too many kids are sent to a particular school, it could lower the quality of the education experience, and if too few are sent, the few poor kids might be overwhelmed by students who have far more advantages and with whom they have little in common.
    On the salary issue, several of points. First, nobody goes into teaching expecting to get rich. Second, conceptually, one could easily make the case for premium pay for those who teach in schools with the poorest and most disadvantaged students. I see this as similar to the military paying soldiers extra who either serve in combat (combat pay) or perform hazardous duties (hazardous duty pay). Third, in assessing the adequacy of pay in any field, I think we need to look at total compensation including health benefits and pensions (both of which are generally superior in the NYC public sector) as well as other fringe benefits for which the employer pays cash (life and disability insurance, 401-K match, FICA matching contribution, etc.). Finally, we should take into account that teachers have the summer off and generally only work 180-190 days per year as compared to 225-235 for most others in the workforce. I think people in most fields tend to be underpaid early in their career and more than adequately compensated in the latter stage. In the NYC suburbs, most people think teacher total compensation is adequate for the most part. As a taxpayer, I want to pay enough to attract and hold good people who can perform their jobs well, but not more than that. That, of course, applies to all public sector jobs, not just teachers.
    I think it might also be helpful if we tried to do more to reduce out of wedlock births, especially among teenagers, as well as other self-destructive behavior among the urban underclass. Bill Cosby recently made a series of speeches to urban audiences conveying this message. More similar efforts by people with credibility could make a positive impact over the longer term.

  6. 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 idea of student teachers–the experienced teachers they work with could give the best of them a strong recommendation for a job.
    And with a larger applicant pool, inner-city schools wouldn’t have to hire teachers who are completely inexperienced (which they do now, through Teach for America) and principals who can’t get a job anywhere else. The most difficult children shouldn’t get the most inexperienced teachers.
    Dedicated, experienced teachers would be willing to teach in these schools (at least for 4 or 5 years at a time) if they knew that they were going to earn enough to be able to buy a house or condo.
    I also think that if public school teachers in inner city schools received the salaries that other professionals receive, they wouldn’t need tenure. The
    security of tenure helps make up for the low salaries.
    Finally, you’re right— no one method of teaching works wtih all kids. This is why our public schools need to spend less money on “scripts” that all teachers are supposed to use, and more on talented teadchers capable of using different methods to teach different kids to read. (Some respond to phonics, some don’t, etc.)
    In my daughter’s school, her union rep has backed her up that on the issue of school officials coming into her class to “observe” whether or not she is following the script. She gets very good results –most of her first-graders can read at or above grade level by the end of the year. That’s how teachers, like heatlh care providers should be graded–outcomes.
    And because her outcomes are good, she has insisted (through her union rep) that she should be able to close her door and teach her students without interference. Since she is willing to handle the most difficult boys that others can’t teach, they have learned to leave her alone. So good unions can help good teachers. And without tenure, protecting weak teachers wouldn’t be such an issue.

  7. 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 no safe level of lead in the body and once it affects the brain there is NO, I repeat, NO method to reverse it. Think about that the next time you consider a toy made in China.
    Barry, money alone will not create good teachers. And I don’t know much about the NEA but if they are like the Ontario Teachers Federation, (OTF) under which I was taught, then I don’t have much good to say about them, even though like them I don’t favor vouchers. The OTF spends a lot of time defending incompetent teachers. I don’t support incompetence anywhere, liberal or conservative, Democrate or Republican.
    Many children learn differently but many teaching methods don’t adjust to different learning styles or needs. I struggled early on in school because teachers refused to recognize I learned differently than they were prepared to teach. Of all the teachers I had only about 2 were for me, exceptional, and should have gotten higher pay for it. I thrived on their teaching ability to recognise my special needs. But creating a teaching environment that can adjust to the individual needs of students and their unique home situations is expensive, especially when you have clusters of students from failed neighborhoods and failed family situations. You just can’t expect children to respond to 6-8 hours of instruction when nothing is being done to repair their home life.

  8. 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.)

  9. 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 errors, less overtreatment etc.)
    And the Medicare Payment Advisory Commission (MedPac) is heading in that direction. In its most recent reports it has been talkign about the need for independent comparative effectiveness reserach, doing head to head comparisons of drugs, devices and procedures to find out what works best. Drugmakers devicemakers and some surgeons have long resisted such head-to-head comparisons, but I think the time is coming when this will happen. I’ve written about MedPac’s suggestions for reform here (scroll down to bottom half of article)http://prospect.org/cs/articles?article=survival_plan.
    In their health care proposals both Clinton and
    Edwards talk about the need for comparative effectiveness reserach in deciding what national heatlh insurance should cover. Clinton also has talked about the need for “shared decision-making” when it comes to elective surgery and testing. Reserach shows that when patients are given an opportunity to completely understand the risks and benefits of various tests and elective surgeries, some 20% to 40% decide not to have the procedure.
    Dr, Jack Wennberg has an article coming out in the November issue of Health Affairs that will describe how Medicare could begin to reward health care providers who implement shared decision-making–and ultimately (some years down the road) penalize those that don’t.
    I also think that, ultimately, Medicare will refuse to reimburse hospitals that don’t use healthcare IT.
    I agree that New York did a good job of closing unneeded and substandard hospitals. Politically, this is always difficult. But people need to understand that the purpose of healthcare is not to create or preserve jobs. The purpose of healthcare is to improve a community’s health. Many people also tend to put too much emphasis on the convenience of having a hospital nearby. We don’t need a lot of small to medium-sized hospitals where doctors perform procedures 4 or 5 times a week. We need larger hosptials where surgical teams are doing the same procedures dozens of times each week. Practice makes perfect.
    A couple of years ago, some pediatricians and parents on the East side were arguing that New York City needed a brand new children’s hospital in midtown (on the East Side.) This was a ridiculous idea–we have a brand new children’s hospital at Montefiore (in the Bronx) and excellent care for children downtown.
    AS for adding new facilities while closing down old ones, we don’t need any more beds or any more facilities in many parts of the country. Fewer and fewer patients are being cared for on an in-patient basis where they stay two or three nights in the hospital. More and more are being treated on an out-patient basis (which is safer.) And the facilities we do need (low-profit trauma centers and neighborhood clinics that provide preventive care in inner cities) is not what is being built.
    Contrary to what Catron suggests, the facts show that even with the aging of the baby boomers, we won’t need more speciaists and few if any additional hospital beds. First of all, the boomers won’t age all at once (Catron seems to envision a tsunami of elderly boomers). They will age the way they were born: over a period of close to twenty years.
    And since upper-middle-class and upper-class boomers are generally much healthier than their parents (thinner, exercise more, eat healthier foods, quit smoking a long time ago) they will probably need less hospitalization–or they won’t need hospitalization until they are in the 80s (again stretching out the period of time when they will be absorbed into the system.) Meanwhile, we’ll learn how to do more and more things on an outpatient basis.
    Catron–When a patient acquires an infection in the hospital, that generatees a new DRG–and a bigger bill for Medicare. When more people in a community are hosptialized, that means more bills for Medicare.
    Peter, you’re right that environmental factors also play a serious role in children’s health. So many of my daughter’s students have respiratory infections, and lead poisoning is a real factor. Also, in her school, a surpisingly large number of teachers have had miscarriages–environmental factors are suspected.
    This is one of many reaons why my colleague at The Century Foundation, Richard Kahlenberg, recommends moving poor kids out of the ghetto and spreading them around in middle-class and uppper-middle class schools in middle-class and upper-middle class neighborhoods.
    Reserach shows that this really works. Behavior improves, teachers who have only 3 or 4 students who aren’t getting help with homework at home can help those students, etc. Read his work on http://www.tcf.org (click on education and inequality on the left hand side of the page.) The only catch is providing transportation for kids who are too young to take city busess (or subways in cities that have subways) on their own. But in New York, eight and nine-year-olds regularly taking subways and buses during daylight hours (especially rush hour, which is safest).
    The younger kids need to be bussed. But that’s a lot cheaper than paying for the problems they’ll have in the future if they grow up and are educated in the ghetto.
    Barry– When you ask questions like “However, I wonder why the public system can’t more easily remove disruptive kids from a classroom and put them in an alternative school setting” I wonder if you and I live in the same world.
    It’s not that the public system couldn’t relocate those kids–it’s that wealthy white taxpayers are not willing to spend the money on poor minority kids. And the parents of those kids–who are living in homeless shelters or in jails–don’t have a lot of political clout.
    As yhou know, in New Jersey, people living in largely white, wealthier school districts were furious at the idea that kids in poorer disctricts needed equal or greater funding.
    Secondly, we’re not talking about 2 or 3 disruptive kids. Often we’re talking about 5 or 6 severely troubled kids. Eight-year-olds who are still in first grade, can’t read, and when they become frustrated or angry, stand up and throw chairs and tables at teachers and other students. And once one kid begins acting out, a third or a half of the class gets excited and joins him. Nine or ten kids can completely trash a classroom in less than five minutes.
    Why do public schools in poor neighborhoods chronically fail? How many top students graduating from top universities do you know who are willing to take a job that starts at $35,000 a year, goes up slowly from that point on, and will never pay more than, say $80,000 (in today’s dollars) 20 years from now in return for working 8 or nine hours days–plus at home in the evening and on week-ends–under sometimes dangerous, often heart-breaking conditions?
    To attract the best and the brightest, we need to pay our teachers more. We need to give beginning teachers at least one year, if not two, as student teachers, working in a classroom with an experienced teacher. (And the student teacher needs full starting pay.) Teachers working in difficult schools with 22-25 kids in the class need a teacher’s assistant or teacher’s aide.
    Physical plants should be maintained. All classes should have clean windows that open and let light in. Roderns, cockroaches etc should be exterminated. All classrooms should have books. (My daughter’s class had no math books her entire first year of teaching.)
    There should be special-ed classes for troubled, disruptive kids with no more than 7 kids in the lcass. There shoudl be SEPARATE special ed classes for retarded or mentally deficiient kids. (Again very small class sizes.)
    All of this takes money. I don’t know how much–but a lot more money than we are spending now. There is not a great deal of money being wasted in our poorest public schools. Aside from some school chancellors, no one is making a huge salary. Principals and asst. principals also are underpaid. Sometimes equipment and books sit someplace in boxes and are never distributed, but that’s about it.
    Education, like health care is labor-intensive, which makes it very expensive. Typically government is invovled in providing labor-intensive services and then is blamed for being “inefficient” because it can’t provide these services at a lower cost. (“Baumol’s law–named after the economistd, William Baumol) The fact is, other industries can downsize, but if you try to cut the numbers of nurses in a hospital (which for-profit hospitals have tried) patients die. And if you try to cut the number of teachers, and the number of special ed teachers (which we do in our poorest schools) kids’ minds die.
    IF you’re really interested in inner-city public schools, rent “The Wire” (an HBO show) on Netflix, and watch the season that takes place in Baltimore’s public schools. It’s extremely accurate. .

  10. 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 hospital. I can’t tell you how many times I was called to evaluate these unfortunate rich folks whose nurses had drugged them into a stupor and, because the floors were so quiet, user-unfriendly, and locked, no passing housestaff had noticed their shabby treatment. God help you if you code…nobody knew where the resuscitation equipment was hidden behind all that wood paneling. Where’s the chart? Who knows? Where’s the nurse? Checking her email. Why weren’t vital signs documented overnight? Well doctor, this is the expensive floor and we don’t want to wake up these entitled patients. Why didn’t you call us for this dangerous rhythm on telemetry? I’m not a cardiac nurse.
    I think there is a simple structural reason for the egregious nursing: the expensive floor accounts for a small share of the hospital’s beds. Therefore it can’t be as specialized as other floors…so the nurses are more frequently caring for patients outside their areas of expertise. No cardiac nurses. No neuro/seizure nurses. No oncology nurses. Just nurses (usually ex-surgical) who wanted to cash in for a couple of years before retirement.
    As an attending, I basically forbid patients under my care from staying on such floors unless they really aren’t very sick. My understanding is that the cardiac surgery department at Colombia has a similar policy…after all, they have to publicly report their mortality rates. But seriously, ask your friends who’ve trained in hospitals with such units. I guarantee my experience isn’t unique.
    There’s a larger point here about the nature of health care quality and patients’ ability to evaluate it. Private rooms and nice furniture impress laypeople, but they have nothing to do with hard outcomes…and in my experience, they tend to cover up some pretty shoddy care. I’ll let somebody else point out the extension to buying health care vs. loaves of bread.

  11. 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 money will help facilitate the closings including money needed to pay off accumulated debt. If some modern, state of the art capacity were added to the system in a region with surplus beds, but a significantly higher number of beds in older hospitals with outdated technology and poor layouts were closed, I think the system would be net better off.
    On the school vouchers, I agree that the private schools can expel or not accept unruly kids. However, I wonder why the public system can’t more easily remove disruptive kids from a classroom and put them in an alternative school setting. If one or two or three disruptive kids can degrade the ability of a teacher to teach a class of 20 or 25 or 30, why should that be tolerated? I am obviously not an expert on this subject, but my perception is that many people in the minority community support vouchers as an alternative to low performing schools that their kids are trapped in. The politically powerful National Education Association has always staunchly opposed vouchers, and they have historically carried the day with politicians, especially Democrats. I would argue that even if results were no better in a voucher school, the opportunity for parents to make an affirmative choice of which school their child attends, should, at the margin, encourage them to take more interest in their child’s education because they had a role in choosing the school.
    Washington D.C. is widely perceived to have a very poor school system overall despite spending of approximately $15,000 per child. Voucher opponents who say don’t drain money out of the public schools but improve them never say just how much should we be prepared to spend on a system that chronically fails, and how is it supposed to improve if it has no competition?
    Finally, for Peter, on school financing, believe it or not, I support less reliance on local property taxes and more on sales and income taxes, though it would probably cost people like me more money. In NJ, on a statewide basis, state aid only covers 40% of school costs. It covers 90% or more of costs in the poorest districts but only about 10% in the wealthiest. The national average, by the way, is 50% of school costs financed by state aid. The upshot in NJ, and many other states, is that most towns do not want new residential development because the incremental property taxes from the new development are not sufficient to cover the cost of educating the additional students. So, with the exception of very high end housing, it is very difficult to build in this state and the permitting and entitlement process is extremely time consuming and needlessly drives up costs which makes housing less affordable for the middle and lower middle class. If a higher potion of school costs (say, 60%-65%) were financed with state aid, this problem would be mitigated. There would also be more pressure to operate the schools efficiently. In our state, we have almost 600 school districts which is way too many.

  12. 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 court order. You want better and equal funding for schools then disgard school funding based on property tax valuations and have the state pay each school the same amount based on number of students and allow the free flow of students (without vouchers) from school to school from all economic districts. Then use the income tax system to fund education. We’ll see how the wealthy are for equalization then. But we all know that schools in wealthy neighborhgoods are not easy access for inner city or poor county kids because of transportation and distance.
    I also think your pre comment linking of my comment to my assumed (and it is only assumed) support for the National Education Association is so Rush Limbaugh that it does not become you.
    As for Maggie’s comments about student behavior and home life determining their educational needs and success (not vouchers) I will add one more thing, that is exposure to lead in their environment largely from old stock housing and lead paint but also from soil in the industrial and inner city neighborhoods poor kids live in. Do a search on lead poisoning and behavioral problems and learning disabilities. Then you will find that vouchers won’t solve these or the problems Maggie pointed out.

  13. 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 and charge more for something else.
    You’re in the 1970s here. This kind of cost shifting was only possible in a fee-for-service environment. It’s impossible in the current reimbursement environment dominated by DRGs, APCs, and per diem rates.
    Yes, it pays per diagnosis (DRG) but whatever the diagnosis it only pays for semi-private rooms (two people to a room); it does not cover private rooms unless deemed “medically necessary.”
    You seem to be under the impression that, because Medicare doesn’t pay additional money for private rooms, Medicare patients aren’t admitted to them. In reality, Medicare patients are often admitted to private rooms. It’s just that the hospital doesn’t get paid for the difference.
    Finally, it’s ridiculous to get worked up about excess capacity just as we are about to be hit by a tsunami of baby-boom Medicare patients. Excess capacity will be the least of our problems when that wave hits the beach.

  14. 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); errors (pay for it once, then pay again to fix the mistakes); costly procedures (pay for more expensive treatments even though less expensive ones produce results just as good); and “gaming” the system.
    I contend, however, that providers are not to blame for the lack of value to the patient in our system since our country’s “pathological mutation of capitalism” (as John Bogle calls it)–which puts profits for the few above value for the many–has infiltrated and broken our healthcare system. This puts providers who truly want to deliver high-quality cost-effective care at a disadvantage by threatening their financial health.
    So, I don’t care how many tiers there are, as long as they all focus on delivering high-value care to the patient/consumer.
    The Curing Healthcare Blog

  15. Thank you all for your comments. Let me respond one by one.
    MG–you’re right, low interest rates help feed the hospital building boom. The problem is that if we build too many hospitals, we all pay for it in the form of higher health care costs (see below). If we build too many condos, the bank that lent the money to the developer usually winds up holding the bag.
    Catron–You seem confused about how Medicare pays. Yes, it pays per diagnosis (DRG) but whatever the diagnosis it only pays for semi-private rooms (two people to a room); it does not cover private rooms unless deemed “medically necessary.”
    Most private insurance also only pays for semi-private rooms. For example when the Mayor of Boston went into the hospital two years ago to have a cancerous growth removed from his back, his insurance didn’t cover a private room. The hospital put him in private room anyway (mainly for security reasons) and that ultimately cost him an extra $800 a night.
    At Mass General a private room is $345 a night.
    In some cities, however, hospitals don’t charge extra for private rooms because excess capacity is so high that they are desperate for patients. In Cleveland, for example, the average hospital is only about 60% full at any given time. Thus when the University System built a new all-private-room facility, it decided not to charge extra for the private rooms.
    Who pays for all of the empty hospital beds in Cleveland?
    Peter is right: “When hospitals compete for patients someone has to suffer less utilization that adds to more overhead distributed to fewer paying patients. . . . those rooms will not pay for themselves and only add to costs for the rest of us.” If the Univerity hospital in Cleveland doesn’t charge more for the private rooms, it has to shift that expense and charge more for something else.
    In particular, we all pay for empty beds and excess capacity in the form of higher Medicare taxes, Medicare co-pays and deductibles. Research shows that in cities where there are more beds (and more specialists, who tend to follow the beds) Medicare spends an average of twice as much per patient per year–after adjusting for differences in age, race, differences in local prices and overall health of the population in that city. In these cities, as hospitals compete for Medicare dollars, more patients are hospitalized, and patients spend more time in the hospitals. Meanwhile, outcomes are no better in those areas where Medicare spends more; in fact they are worse.
    Los Angeles is notorious in this regard. Medicare spends twice as much per patient at UCLA hospital as it does on very similar patients at the Mayo Clinic. Meanwhile, UCLA recently built an all-private unit with 315 square foot rooms–about the size of a small apartment in Manhattan. Both outcomes and patient satisfaction are better at the Mayo Clnic.
    What’s extraordinary is that U.S. hospitals are building all private units while saying that they cannot afford the information technology needed to create electronic medical records. Healthcare IT saves lives; there is no debate. And in many other countries, it is becoming commonplace. But in the U.S. it seems that hosptials have discovered that they can make more money–and draw in more patients– if they invest in private rooms.
    And Barry’s right,it costs more to build private rooms. In NYC, for example, it would cost the average hospital in New York City $25,000 more a bed to convert to private rooms.
    Barry ends his comment by saying: “Personally I like the concept of private rooms because I think they are safer and quieter than semi-private rooms, though they are more expensive to build, primarily, because twice as many bathrooms are required. Hospitals can add cost all they want, but if they don’t perform well on outcomes measures like infection rates and minimizing preventable errors and that information were readily available to all, they will and should lose business.”
    I agree that they should lose business–but I’m not sure that they will. Unforunately, American consumers seem to be suckers for valet parking and private rooms–not realizing that there are many things that you can’t see (infection control, error reporting, Healthcare IT) that are far more important. And even some doctors tend to prefer the pavailions and the convenient parking lots.
    For doctors healthcare IT means learning a new system. Some doctors don’t even know how to type! And doctors over 35 or 40 have been resistant to learning the new techology. Many say I don’t have time. I have to see patients in my private practice. After all, time is money . . . Cedars Sinai in LA spend a fortune on healthcare IT, the doctors (many of whom have a lucrative private practice in Beverly Hills) rebelled and refused to use it and Cedars Sinai ripped it out.
    On school vouchers, that is a separate discussion, but I have to agree with Peter. Barry argues that “nearby parochial schools educating kids from similar socioeconomic backgrounds” do a better job.
    But Barry what you are ignoring is that nearby parochial schools regularly expel kids who
    are behavior problems. The public schools wind up with the crack babies, the first-grade girls who clear signs of sexual abuse probably from age two or three, the first-graders who come to school with cigarette burns adn other scars. These are angry kids, disuruptive kids–kids that parochial schools won’t take and won’t keep. I know because my daughter has spent four years teaching first grade at one of the toughest schools in the Bronx.
    She had kids suffering from all of the problems I’ve described above–and more. And they weren’t put in special ed and they didn’t get special counseling because schools in the Bronx don’t get enough money to have enough special ed classrooms for all of the children with terrible problems. New York City’s public schools epitomize the “two teir” system that has overtaken this country. My kids went to city schools in an upper-middle class city neighborhood where they had books, clean schools, and safe conditions. In my daughter’s school there are mice, some rats, the windows don’t open (and have never been cleaned) and the interior walls of her first classroom were badly charred because a first-grade students had set fire to the classroom several years earlier.
    And in four years, our mayor has never stepped foot in my daughter’s school.
    Meanwhile, by working very bard with the kids and their parents she has managed to get the vast majority of her students up to or above reading level for their grade each year. She sends notes home that her boyfriend translates into Spanish. Parents who live in homeless shelters come in for teacher conferences. So don’t blame the parents, don’t blame the teachers (schools like the one where she teaches attract very dedicated teachers) and don’t blame the kids. Blame a system that lets money and power decide which schools get the resources they need.
    Finally, on vouchers. There is a great deal of reserach showing that vouchers just don’t work —years of research That’s why so few voucher plans have ever gotten off the ground.
    IF you’re really interested in the subject go to http://www.tcf.org, scroll down on the left to “education and inequality” and read the articles by my colleague Richard Kahlenberg on economic intergration and economic segregation of schools.
    Thanks again for the comments.

  16. Maggie asks:
    > Are We Willing to Accept a Two-Tier Hospital System?
    Seems like a strange question to ask after so many decades of having a three or four tier hospital system.

  17. Peter,
    With all due respect, your school voucher comment would probably make you a highly desirable candidate as a spokesman for the National Education Association. Even my very liberal wife supports school vouchers in the inner cities as does her equally liberal twin sister.
    In New Jersey, after a landmark court case called Abbott vs Burke, the state legislature was required to provide sufficient funding for 31 special needs low income districts in our state to allow them to spend at the same level as wealthy districts. One of these districts, Asbury Park, now spends $22,000 per pupil which is the 4th highest spending rate in the entire country. And the system is still dysfunctional! After raising teacher pay, providing for smaller class size, improving the physical plant, etc., there has been little or no progress. The NEA’s perpetual answer: throw more money at us. If that doesn’t work, they’ll say they can’t be held accountable because the kids come from dysfunctional families and just have too many disadvantages to overcome. At the same time, nearby parochial schools educating kids from similar socioeconomic backgrounds are doing a much better job at far lower cost.
    If we can take a kid that is costing the public system $15,000 to $20,000 to educate out of the public school and place him in a private school for a $5,000 or even a $10,000 voucher, everyone will be better off. Even the public school will have more money left per child to educate the students who remain. Moreover, now that they have some real competition, they have more motivation to improve in order to prevent being put out of business altogether. The NEA opposes vouchers not because they think a one size fits all public system is wonderful, but because they see it as a threat to their monopoly power and their livelihood.
    As healthcare reform is debated during the upcoming campaign, there is an emerging consensus that both parties are right about something. Democrats are right that we need everyone to participate in the system in order to have a shot at achieving affordable universal coverage, and Republicans are right that there needs to be plenty of choice to have any chance of passing through the legislative process. It’s what the people want, not just what the lobbyists want.

  18. “It may not fit the party line, but hospitals are going to private rooms for one reason and one reason only: patients want the privacy.”
    If this is true would medicaid and medicare patients get equal access to private rooms? I doubt it. Would you support that Catron? And can’t you buy insurance that will cover the additional cost of a private room for an additional premium cost? That can’t be illegal.
    Private rooms are indeed an attempt at a two tier system. Is this bad. Well not if there are enough rooms and staff to equally cover non-private patients, I guess not. But what it really does is add to the cost of healthcare for everybody. When hospitals compete for patients someone has to suffer less utilization that adds to more overhead distributed to fewer paying patients. And if as Catron says the attraction is not more money (yea sure) but more patients, then those rooms will not pay for themselves and only add to costs for the rest of us. Try building a hotel that charges the same for luxury suits as other rooms and see how long you stay in business.
    But this is the argument that Barry Carol and others make. “We want choice in healthcare.” Choice is the code word that means we not only want a two-tier hospital system but we want a two-tier medical system. By the way these same people usually also want a two-tier educational system by way of vouchers. What this will ultimately do is starve the lesser tier for funds and resources. As health systems are starved for funds and made less functional then the money men along with their political lackeys create their own justifaction for dismantling the system all together. “See we told you it wouldn’t work.”
    If we all use the system equally we all have a stake in it’s quality, cost and proper functioning.

  19. Catron,
    In the case of hospitals that are either so highly regarded that everyone wants them in their network and/or have significant market share, either as a stand alone entity or as part of a group, they are in a strong position to negotiate rates with private insurers. Take prestigious Massachusetts General Hospital (MGH) in Boston, for example. They basically tell insurers at negotiation time, here are our costs, this is what we need to get paid, and it generally gets that amount or something close to it. It probably works similarly with community hospitals in rural areas that may be the only hospital for many miles around.
    So, if these hospitals with significant market power add to their costs by adding a large number of private rooms, super expensive state-of-the-art operating room and imaging equipment, or frills like waterfalls, large play areas for children and elaborate lounges for family members and others visiting patients, those costs get reflected in the per diem or case rate payments that insurers ultimately agree to. Even Medicare, I suspect, over time, reflects overall hospital costs in its DRG rates.
    I am not a fan of Certificates of Need, and we’ve tried them before, in any case. I would much rather attack hospital based utilization with the following strategies: (1) make living wills or advance medical directives a requirement of insurance to minimize futile and often unwanted care at the end of life. At the same time, make sure that reimbursement rates for palliative and hospice care are reasonable and adequate. (2) Move toward implementation of interoperable electronic medical records, especially in hospitals so multiple doctors treating the same very sick patient with several co-morbidities know what each other is doing. Hopefully, that will help to reduce or eliminate duplicate testing and adverse drug interactions. (3) Robust price and quality transparency tools available in an easy to access user friendly format can help referring doctors make more cost-effective medical decisions. (4) Differential co-pays can help to steer patients to hospitals that offer the best combination of quality and cost (value for money). (5) Replace the current medical malpractice system with specialized health courts to reduce defensive medicine and make it easier for hospitals to admit mistakes and improve their processes in the future. We also need a better mechanism for closing unneeded hospitals in markets with a surplus of beds because they have lost population over the years.
    I personally like the concept of private rooms because I think they are safer and quieter than semi-private rooms, though they are more expensive to build, primarily, because twice as many bathrooms are required. Hospitals can add cost all they want, but if they don’t perform well on outcomes measures like infection rates and minimizing preventable errors and that information were readily available to all, they will and should lose business.

  20. When a hospital builds only private rooms it is turning itself into an exclusive hotel for those who can afford it.
    Maggie, if you had any real understanding of how hospitals get paid, you would never have written this hopelessly naïve passage.
    Medicare and Medicaid pay for inpatient stays by DRG, and private insurance almost always pays a per diem rate. In all of these cases, the hospital is forbidden by law or contract from charging the patient extra for a private room. This means that hospitals receive nothing extra for a private room.
    And, if you have it in your head that there are enough (paying) self-pay patients to support this trend, it’s another fantasy. No more than 15% of self-pay patients pay anything at all. In the more affluent areas, this figure climbs to a whopping 25%.
    It may not fit the party line, but hospitals are going to private rooms for one reason and one reason only: patients want the privacy. If a hospital in any medium-to-large metropolitan area (irrationally) ignored patient preference in this matter, it would accomplish nothing but a loss of patients to the institution down the street—the one with the private rooms.

  21. Is the hospital building boom really that unique or is it just a reflection of the huge building trend in the commerical sector that the U.S. experienced as a result of historically low interest rates earlier this decade?