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Big Healthcare, Big Government, Big Problems

Cost-shifting and systemic inefficiency are poor substitutes for needed transparency.

Here’s a new research finding that will surprise no one: a major report released by the Institute of Medicine in September says America’s health care system has become too complex and costly to continue business as usual. It concludes that inefficiencies and a variety of other factors hinder our progress in improving health and threaten the nation’s economic stability. And its best estimate suggests that 30 percent of health care spending—more than $750 billion—is wasted on unnecessary services each year.

I said you wouldn’t be surprised. The report, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, comes to the same conclusions just about every healthcare consumer in the country has already reached, but it documents them with the kind of detail that should make our political, healthcare and insurance leaders squirm.

Here are a few of the report’s other findings:

• 20 percent of patients report that test results or medical records were not transferred from one place to another in time for an appointment.

• One-third of hospital patients are harmed during their stay; one-fifth of Medicare patients are re-hospitalized within 30 days.

• 63 percent of patients don’t know how much their care costs until they receive a bill; 10 percent never find out.

So much for the idea that our healthcare systems are focused on total quality management, efficiency and transparency. In fact, at least as much evidence would seem to support the idea that a good deal of the focus today tends to go toward cost-shifting, revenue enhancement and service charge manipulation.

Here in Cleveland, an extensive series of reports over the past year by The Plain Dealer has documented how some of the region’s leading medical institutions—with the Cleveland Clinic leading the charge—have “re-invented” an increasing number of former medical office buildings as “outpatient hospital facilities,” so that patients referred to them for what previously were often routine tests and procedures now can be billed as “outpatient hospital visits.” This enables higher payments from Medicare and private insurers and an opportunity tack on undefined “facility fees” to bills (for those whose insurers haven’t negotiated contracts that dis-allow them).

Finally—just “incidentally”—the strategy also shifts a good portion of these higher costs out of the “doctor’s office fee” and co-pay category and into hospital fee structures that are billed instead against the patient’s yearly deductible. (read this story for a real eye-opener on how this cost-shifting works).

This kind of strategy, apparently initiated to help the institutions recoup revenue lost through Medicare cost control efforts, underscores the challenge we as a nation face at taming our healthcare costs. It also shows that when “Big Healthcare” runs smack up against “Big Government” and “Big Insurance” (cost controls) it will seek to make up lost revenue from consumers. They often can not readily find out what they will be charged, or that the same procedure at a different facility will cost them vastly less, and who in cases like this have no recourse but to pay the inflated bills.

Such issues should be a concern to every employer and every consumer, and those in the foodservice industry are no exception. If anything, the cost of healthcare benefits tends to weigh more heavily on those in the noncommercial sector of the industry, and their labor cost structures, than elsewhere.

As I have said in this column before, I am by inclination a free marketer. But when evidence suggests that market forces are working against consumers as they do here, the sad reality may be that “Big Government” regulation is the only practical way to address the problem. Those who believe healthcare market competition can be made to work need themselves to work much harder to level the playing field that today lets cost-shifting substitute for strategy or market-based competition.

What we need is not a government takeover, but government policy. When politicians allow political positioning, partisan squabbling and simple irresponsibility to win out, they fail us. In the matter of national healthcare policy, Washington has failed us for too long. It’s something to keep in mind in November.

TAGS: Healthcare
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