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Journal of General Internal Medicine Editorial Cites Cuts in Nursing, Focus on Profits

According to a study and editorial released today, patients at for-profit hospitals are two to four times more likely than patients at not-for-profit hospitals to suffer adverse events such as complications following surgery or delays in diagnosing and treating an ailment.

"This study is another warning for those who would trust hospital care to the marketplace," said Dr. Gordon Schiff, author of the editorial ("Fatal Distraction" JGIM, April, 2000).

Previous research has found death rates 25 percent higher at for-profit hospitals than at teaching hospitals and 6 to 7 percent higher than at non-profit, non-teaching hospitals. In addition, for-profit hospitals employ fewer nurses, charge higher prices (costing Medicare an additional $5.2 billion annually) and spend a higher percentage of their budgets on overhead.

A study published last year in the Journal of the American Medical Association also found that for-profit HMOs are lower quality than not-for-profit HMOs on 14 quality measures.

Dr. Schiff cited a remarkable study on blood donation by Dr. Richard Titmuss ("The Gift Relationship"), published three decades ago which found that for-profit blood centers were less efficient, more costly, and more dangerous to patients than voluntary, non-profit centers.

"Hospital managers and even medical staffs are preoccupied with survival in the marketplace," said Dr. Schiff. "This preoccupation represents a "fatal distraction" from the real business of health care -- caring for patients and improving quality."

"We're very concerned that non-profit hospitals will be forced to adopt the same cost- and quality-cutting measures of the for-profits," continued Dr. Schiff. "It's much easier to measure money than quality of care."

Public non-teaching hospitals also had higher rates of adverse events than not-for-profit hospitals and teaching institutions, which the study suggests may be due to insufficient funding during the study period. The study examined 15,000 patients hospitalized in Utah and Colorado in 1992, and many small public Colorado hospitals experienced financial losses that year.

"The competitive free market described in textbooks doesn't and can't exist in health care," says Dr. Claudia Fegan, an internist in Chicago and former medical director of Michael Reese hospital in Chicago. "Seriously ill patients can't comparison shop or accurately judge quality. We need a not-for-profit national health system to increase access for the millions of uninsured, to strengthen our nation's health care safety net, and to improve quality for all."

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Lull in health inflation in mid-1990's explained by other factors

Washington, D.C. -- While millions of Americans have been shunted into HMO's over the past decade, there's no evidence that managed care saves money, according to a study in today's Health Affairs, the nation's largest health policy journal.

"HMO premiums are up nearly 20% in the past two years, but a lull in health inflation in the mid-1990's is so often attributed to HMO's as to have become 'folklore,'" noted study author Kip Sullivan, who reviewed three decades of research for the study.

"The claim that HMO's are more 'efficient' than the fee-for-service (FFS) plans they replaced is typically based on one of two research errors," said Sullivan. "Either the study didn't take into account higher HMO administrative costs, and only looked at cuts in hospital or doctor care, or it didn't take into account factors like cherry-picking healthier patients or cost-shifting to other payers as an explanation for lower premiums."

The study also notes that factors other than the spread of HMO's explain the mid-1990's lull in health inflation. These include the threat of price-controls and health reform in 1993, the well-documented insurance underwriting cycle (three years of high premiums followed by three years of low premiums), a low inflation rate in the rest of the economy, and HMO's lowering premiums (short-term) to gain market share.

"As managed care enrollment has soared so have administrative expenses," said Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard. "The percentage of workers in the health system dealing with paperwork has increased from 18% to nearly 30%, belying the myth of HMO efficiency."

"The verdict is in on corporate control of health care. It has failed," said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. "The US spends more on health care than any other country in the world yet leaves 45 million uninsured and ranks 37th in performance according to a recent study by the World Health Organization. It's time for not-for-profit (single-payer) national health insurance."

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PHYSICIANS URGE INSURERS TO "KICK THE HABIT"

Despite calls to divest, insurers continue to be major shareholders in tobacco firms. Prudential has actually increased its stock holdings in tobacco nearly 400% -- to $892 million -- in the last 4 years, according to findings published in today's Journal of the American Medical Association. "Insurance Firms' and Mutual Funds' Tobacco Habit," by three researchers at Harvard, also finds that the popular mutual fund Fidelity has major stock holdings in tobacco, including over $6.6 billion of Philip Morris stock -- 8% of the entire company.

"A health insurer that buys tobacco stocks cares more about profits than the health of its patients," said lead author Dr. Wesley Boyd. "Teachers, physicians, and those who invest their savings in mutual funds are unwitting accomplices in causing 400,000 tobacco deaths a year."

Insurers' tobacco holdings include:

Cigna, the giant HMO firm, owns over $38 million in Philip Morris stocks and $4 million in Loews stocks.
MetLife's stockholdings total $55 million in Philip Morris and almost $7 million in Loews.
Prudential Insurance owns $435 million of Philip Morris, nearly $320 million of Loews stock, and $137 million of RJ Reynolds.
Mutual funds' tobacco holdings include:

Fidelity owns $6.6 billion of Philip Morris stock and $23 million of RJ Reynolds.
Vanguard owns stock in all 4 major tobacco companies, including over $1.1 billion in Philip Morris and over $100 million in Loews.
TIAA-CREF also owns stock in all 4 companies, holding $732 million worth of Philip Morris stock and over $37 million worth of Loews stock.
Sanford Bernstein stockholdings amounted to $912 million of Philip Morris and over $137.3 million of RJ Reynolds.
"It's time to push insurers and mutual funds to kick their deadly habit," said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. "Stronger physician and public protest and yes, government action against tobacco in the form of higher taxes and bans on marketing and exports, is needed."

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