Hospitals

As you might guess, hospitals in Alaska face a greater challenge keeping up with medical science and maintaining quality of care. Yesterday at a chamber of commerce luncheon, I listened to the Borough Mayer entheuse over his plans to promote greater cooperation between the two hospitals, both of which are partially owned by the Borough with an independent nonprofit operating board. Would a merger reduce costs, patient charges and improve quality of care?

Almost everything government has done increased healthcare cost, charges to the patients and arguably reduced quality of care. Until and unless the medical profession recaptures it’s leadership and control over health care that pattern is not likely to change. Medicine struggled for centuries with harsh control and manipulation by religion. It was only through the reemergence of Roman law and law schools established alongside medical schools that medicine was able to loosen the yoke of religious dictum.

In an effort to curtail costs, government imposed certificate of need on the building of hospitals and the addition of hospital beds with the theory that fewer beds would result in lower cost and fewer hospital days. Rather than lowering costs, the price to the patient for a day in the hospital went from a reasonable price approximating a day in a hotel to a thousand dollars or more, an unintended monopoly

The next great idea was with reimbursement. Called a DRG, Medicare now reimburses hospitalized patients, so much per diagnosis, so come what may, the hospital receives only so much for an admission based on the diagnosis no matter the care. Furthermore the amount of the reimbursement depends on a percentage of the usual and customary charges. Obviously usual and customary charges were exaggerated in anticipating a better reimbursement. Reacting to these higher charges, Medicare tried to make it a federal offense to discount charges to patients making certain hospitals actually collected these padded charges. Hospital administrators willingly complied because the reimbursement would be only a high fraction of the average charge, a heavy burden to the uninsured or privately insured patient.

Non profit hospitals are indeed nonprofit corporations. As with all corporations, their primary motive is sustainability and profit, not on the books but in the operating budget and management pay. Nurses were forced to unionize, now an almost universal reality, and administrators merged into CEOs with million dollar salaries. How did this happen? Look no further than the American Hospital Association, an exclusive club of hospital CEOs.

Will merging two competing hospitals reduce cost, reduce charges to patients and improve patient care? I don’t think so, monopoly is monopoly. Good medicine is not a business.