Category: Hospitals

Why Do Hospitals Host Charity Galas? (Hint: Not To Raise Money)

Tickets started at $500. Food and beverages totaling $258 were budgeted for each person. A lucky reveler went home with a $125,000 Lexus Luxury Hybrid Sedan, donated for the occasion. It was the November 8, 2011, nonprofit Cedars-Sinai Medical Center’s annual Board of Governors Gala at the Beverly Hilton Hotel.

Of the hospital’s $2.8 billion total revenue that year, the lavish party netted the hospital $780,000 — barely a quarter of the C.E.O.’s salary.

Most galas, says [Charles Rehberg, a former hospital C.F.O], “are part of a carefully crafted strategy to promote their ‘charitable’ image in the community and engage the community leaders in their market. Look at the board of the foundation. It is generally the community business leaders, politicians and thought leaders in the community. It is very difficult to serve on such a board and also criticize the hospital for their high costs, charitable conduct, etc. By engaging these leaders in their ‘mission,’ they buy their support.

Rita Healey, 100Reporters. HT: Ron Shinkman, FierceHealthFinance.

Hospital Safety Matters

Patients who are hospitalized for pneumonia at a low-scoring facility were 67 percent more likely to die within 30 days of admission than pneumonia patients at a top-scoring hospital, according to the Consumer Reports analysis. Of 1,000 surgical patients who develop a serious surgical complication in a top-rated hospital, 87 or fewer die, compared to more than 132 in a low-rated one — a 52 percent higher fatality risk. (Reuters)

Hint: Don’t get care at Bolivar Medical Center in Cleveland, Mississippi.

High-Priced Hospitals are Not Necessarily Better Hospitals

foto-hospitalThe study found that high-price hospitals averaged 474 staffed beds — more than double the average number of beds in the low-price hospitals — and had market shares about three times as large as those of low-price hospitals. The high-price hospitals were almost three times as likely to be teaching hospitals, were much more likely to offer specialized facilities and services, and received significantly higher revenues from sources other than patient care. In national rankings of hospitals’ reputations, high-price hospitals scored higher, but clinical outcomes measures were mixed. High-price hospitals performed better on one measure of mortality (for patients with heart failure), but performed worse than the low-price hospitals on measures of excess readmissions and on patient-safety indicators, including postsurgical deaths and complications.

Why Hospitals Are Still Gouging the Uninsured

Two recent posts have discussed out of control prices for hospitals’ services, especially in ERs. The first argued that sky-high hospital prices are the result of government interference. The second cheered the fact that consumer-driven health plans are inducing hospitals (ever so gradually) to be more upfront with patients (at least, those coming in for scheduled surgeries) about how much they will have to pay out of pocket, and agreeing on payment plans before admission.

untitledObamaCare promises to come to the rescue of uninsured patients who are charged outrageous prices by hospitals. Statutory language purports to limit hospitals’ charge to uninsured patients in the ER to “not more than the lowest amounts charged to individuals who have insurance covering such care”. Hospitals which fail to adhere to this policy risk losing their non-profit status. (The relevant text is on page 739 of the enrolled version of the bill here.)

Hospitals take threats to their non-profit status very seriously. So, since the law was passed in 2010, you might expect that the overcharging of uninsured patients has long since stopped. You would be wrong. Like everything else in ObamaCare, this has malfunctioned.

In Time magazine, Steven Brill reports that hospitals continue to levy exorbitant charges on uninsured patients presenting at ERs, and accuses the Administration of “bungling the easy stuff.” Well, the “stuff” is never “easy” when the federal government gets involved.

How Colleges Are Just Like Hospitals

A hmw_0314_collegedebttigher education riddle: When can a college slash tuition by almost half, without losing revenues? Answer: When nobody much pays full tuition anyway.

When Converse College, a tiny women’s college here, announced that it was “resetting” next year’s tuition at $16,500, down 43 percent from the current year’s published price of $29,000, the talk was about affordability, transparency and a better deal for struggling families.

But of Converse’s 700 undergraduates, only a small number — in the single digits, its president said, paid the full sticker price in recent years. Almost everyone received a tuition discount from the college, along with, in many cases, financial aid from the state and federal governments. (NYT)

But you won’t hear any of the usual suspects in health policy complaining about the universities that pay their salaries.

Should We Bail Out Hospitals for Their Bad Debt?

previous blog entry tried to shed some light on the phenomenon of hospital charges that are out of control, such as $500 for a single stitch.

Well, the hospitals have their challenges, too. They increasingly have to worry about collecting money directly from patients, instead of insurers, according to recent articles.

However, it is hardly new. Back in 2009, an article appeared under the headline “Hospitals Forced to Become Bill Collectors”. The article lamented the rise of high-deductible health insurance, which means that a higher proportion of costs are paid directly by patients.

Well, the self-pay patient is here to stay, and hospitals still struggle to get his money. The way hospitals speak about this issue, you would think no-one else has ever had to figure out how to manage the risk of not getting paid for services rendered. The idea of informing the patient how much he owes before he shows up for a scheduled surgery, and discussing a payment plan if he cannot afford his entire share upfront, are still viewed as mysterious and odd requirements by most hospital administrators.

Sky-High Hospital Prices are a Result of Government Interference

Despite its editorial position in favor of more government control of people’s access to medical care, the New York Times has an excellent track record of journalism covering the real problems in U.S. health care. A fine example is Elisabeth Rosenthal’s report last Monday (“As Hospital Prices Soar: A Stitch Tops $500″, December 2, 2013) on outrageous hospital prices, including $500 for a single stitch.

dollarshcShe identifies something that we don’t hear from hospitals themselves: Emergency rooms are profit centers. And we are not talking about rocket surgery: As Rosenthal notes, stitching a wound with needle and thread ― a procedure undertaken since antiquity – routinely leads to a charge of over $1,500.

Rosenthal filed her story from San Francisco. California requires hospitals to file all their charges for procedures (the “chargemaster”) with the Office of Statewide Health Planning and Development (OSHPOD), which publicizes them. Many observers believe that the state forcing hospitals to publicize prices will lead to price reductions. However, this is a misdiagnosis: Addressing the symptoms and not the cause.

Maybe There is More Quality Competition Than We Realize

092112hospitals_512x288The researchers found that hospitals with higher survival rates net of the cost of treatment were rewarded with more patients. More specifically, if in a given year hospital A had 10 percent higher productivity than hospital B, hospital A tended to have 25 percent higher market share that year and to experience 4 percent more growth over the subsequent five years.

The team also found that the variation in survival rates was more important in driving market share than the variation in cost was. In other words, patients seem to seek out hospitals with better survival rates but not ones with lower costs.

More from Pete Orszag.

Hospitals that Look Like Hotels

0624-hospital-private-room_vg“We found that patient demand correlates much better to amenities than quality of care,” said Dr. John Romley, a research professor at the Leonard D. Schaeffer Center for Health Policy and Economics of the University of Southern California, who has studied the trend. That means that hospitals can improve their bottom line and their reputation by focusing more on hospitality than health care — offering organic food by a celebrity chef rather than lowering medication errors, for example. (NYT)

More evidence of the theory I first proposed in Health Affairs here and here.

Hospital Transparency in California

This is Jason Shafrin:

30-ways-to-cut-your-health-care-costsHow did hospitals respond to the law? Over 95 percent of all California hospitals reported that they offered free care to uninsured patients with incomes at or below 100 percent of poverty. However, higher-income uninsured patients still faced the risk of high prices based on billed charges.

Further, this policy did not help improve the accuracy of the billed charges to Medicare. Medicare billed charges are as ridiculous as ever. As shown in the figure below, Medicare payments equaled 20 percent of billed charges by California hospitals in 2010, down from 43 percent in 1997. Thus, although the uninsured are paying less for hospital care, the insured may be paying relatively more.

Health Affairs study.