Hospitals

David Clark sat in an ambulance for hours late Saturday night in front of the Park Slope Armory in Brooklyn. Mr. Clark, who is 48 and relies on a wheelchair because of diabetes and a leg injury, was late to receive his medicines. But he still had not even been admitted to the armory, which was a designated shelter for patients with special medical needs who had been displaced because of the storm.

It might seem like the New Health Dialogue comes down pretty hard on "medical innovation" sometimes. Yes, we are skeptical of the "new" and the "high-tech" -- for example DiVinci robotic surgery or 64-slice CT scanning -- because there is often evidence that the newest invention is really only the most expensive, rather than the most efficacious.

Sometimes though, the latest advance in medical technology simply blows your mind and makes you want to stand up and applaud. That is surely the case with Charla Nash, the newest recipient of a full face transplant. Mauled by a chimpanzee in 2009, Ms. Nash's face was disfigured beyond all recognition.

A new study in the Journal the American College of Cardiology finds that doctors at different hospitals vary widely in their assessment of who qualifies as an appropriate candidate for elective coronary angiography (a way to look for clogged coronary arteries).  If Jack Wennberg and his daring band of disruptive Dartmouth Atlas docs have taught us anything, it’s that variation marks the spot for the inconsistent -- and often inappropriate -- use of health care services.

According to researchers at Duke University Medical Center, different hospitals use wildly disparate criteria for determining which patients need non-emergency coronary angiography.  The authors found that hospitals with a lower rate of positive tests -- meaning they test a lot of people who end up not having heart disease -- tend to be more likely to perform angiography on younger, asymptomatic patients. Out of more than half a million medical records examined, the researchers found some hospitals with rates of positive tests as low as 23 percent.

Part II of our series on non-profit hospitals is here.

There are 5008 community hospitals in the United States. They care for over 35 million patients each year--one in every nine Americans, if distributed equally. Total payments to community hospitals amount to over $650 billion per year. That’s a lot of money: about the same as the entire budget of the Department of Defense, including the wars in Iraq and Afghanistan. It’s nearly a quarter of our total health spending; over four percent of GDP; over $2100 per American. Community hospitals employ 5.4 million people. What’s more, all those hospitals are the training sites for our next generation of doctors, nurses, and PA’s: the very medical practitioners who will push for efficient delivery of health services, or drive unsustainable and destructive cost growth in the coming decades.

Clearly, hospitals matter.

Part I of our nonprofit hospital series is here.

Hospitals, even nonprofits, are not excluded from federal taxes by default. Rather, each hospital has to qualify individually for its own slice of billions in federal tax exemptions doled out each year. The criteria for qualification are laid out in §501(c)(3) of the Internal Revenue Code -- the same section that lays out qualifications for other exempt organizations like churches, nonprofit charities, educational institutions, etc.

The IRS states that the nonprofit must be operated “exclusively for exempt purposes” in order to qualify. Those purposes include work for “charitable, religious, educational, scientific,” purposes. The charity subset includes “relief of the poor, the distressed, or the underprivileged," and "lessening the burden of government.” The last function, “lessening the burden of government,” is particularly important to this issue. It suggests that nonprofits should be providing services that the government might also provide, and so the tax exemption should provide more benefit to the community through the charity than it would if the government simply collected the tax and provided the service itself.

Last year, health care spending grew 3.9 percent (Health Affairs), only 1.4 percent faster than GDP. That’s low, compared to previous years’ growth over GDP. From 1975 to 2005, the CBO found that health spending grew nearly twice as fast as the overall economy, driving the increase of health spending from around 8 percent of GDP to 16 percent today (OMB).

To some, this comes as long-awaited good news. A major goal of the Affordable Care Act is to 'bend the curve' of health spending. Although many of the truly impactful cost-saving provisions of the bill (IPAB, Cadillac-taxes, etc.) are backloaded for full implementation after 2017, some went into effect right away. One such provision was lowering the government's payments to private Medicare Advantage plans to compensate for their inefficiency compared to their traditional public counterpart.* The CMS Office of the Actuary published its spending projections in Health Affairs:

The continued low rate of estimated growth in national health spending in 2010 reflects two major factors. First, Medicare spending growth is estimated to have been lower as the rate of growth in payments to private plans under the Medicare Advantage program slowed in 2010.

If you were hoping that health reform would actually help control health care costs, this looks like great news! The program is working as intended. Not everyone, however, is thrilled by this recent drop in health care spending. After all, one person's health spending is another's health revenue.

NUMBER OF THE DAY: 5008

There are 5008 community hospitals in the United States. They care for over 35 million patients each year--one in every nine Americans, if distributed equally. Total payments to community hospitals amount to over $650 billion per year. That’s a lot of money: about the same as the entire budget of the Department of Defense, including the wars in Iraq and Afghanistan. It’s nearly a quarter of our total health spending; over four percent of GDP; over $2100 per American. Community hospitals employ 5.4 million people. What’s more, all those hospitals are the training sites for our next generation of doctors, nurses, and PA’s: the very medical practitioners who will push for efficient delivery of health services, or drive unsustainable and destructive cost growth in the coming decades.

Clearly, hospitals matter.

That’s why this is the first in a series of posts examining the hospital system, and especially the role of nonprofit hospitals. Of the 5008 community hospitals, nearly sixty percent are nonprofit, private organizations. It’s pretty rare in the US to have a market so dominated by non-profit, non-governmental producers. What makes the hospital system so different? Do such nonprofit hospitals provide any more benefit to their communities than for-profit hospitals? Would we be better off with more government-owned hospitals? Most importantly, can changes to the current non-profit model improve our hospital system?

We’ll examine all of those questions and more in the coming days and weeks. Be sure to follow our Twitter for new posts and other updates!

Many aspects of health care reform require revolutionary thinking and groundbreaking research to move the system down unexplored pathways to new heights of efficiency and excellence.

...And some things don't. There are some solutions we see clearly right in front of our noses, with their implementation stymied by perpetual politicing. If you ever needed a clearer pictures of how our current Congressional process is ill suited to actually controlling the ever increasing costs of Medicare (and why IPAB, despite all the hemming and hawing on the Hill, is desperately needed), look no further than Sam Baker's report today in The Hill:

A bipartisan majority of House lawmakers is pressing Medicare to reverse a proposed cut to hospital payments.

The Medicare agency recently proposed a 3.5 percent cut in payments to hospitals as well as a 2.9 percent adjustment to offset payments that it said are the result of changes in how come claims are filed. But 219 House members said hospitals can't afford the cuts, and urged Medicare to reconsider the proposal.

"If the proposed rule is enacted, the net impact for hospitals would be an average decrease in inpatient payments," the lawmakers said in a letter to Medicare Administrator Don Berwick. "This is a decrease that hospitals can ill afford."

The letter says hospitals could lose more than $6 billion from the proposal. It was signed by 95 Republicans and 124 Democrats. A similar letter in the Senate garnered 45 signatures.

If we actually want the government to spend less on health care, we need to actually spend less on health care. And yes, this means somebody WILL make less money. Today's unacceptably high levels of Medicare spending will always be somebody else's acceptably high levels of Medicare income. It's the inability to contemplate short term "belt tightening" and shared sacrifice, at the expense of the long term sustainability of the health care system as a whole, that turns today's symptoms into the combined fiscal-healthcare crisis (and graph) everyone predicts.

NUMBER OF THE DAY: 25,000 = 1/8th

If other industries worked like health care, General Motors would replace 1/8th of its entire staff with rookies, simultaneously, every July. That's what happens in hospitals, where a new crop of 25,000 residents -- recent med school grads -- shows up bright eyed and bushy tailed ready to "save lives," -- or, unfortunately, make mistakes and kill patients in the process of learning how to care for them.  

Los Angeles doctors are plentiful, and Angelenos have some of the highest rates of visits to doctors and specialists in the nation. So you’d expect Angelenos to get the very best health care. But do they really?