By Elisabeth Rosenthal
The New York Times, September 1, 2019

As voters fume about the high cost of health care, politicians have been targeting two well-deserved villains: pharmaceutical companies, whose prices have risen more than inflation, and insurers, who pay their executives millions in salaries while raising premiums and deductibles.

But while the Democratic presidential candidates have devoted copious airtime to debating health care, many of the country’s leading health policy experts have wondered why they have given a total pass to arguably a primary culprit behind runaway medical inflation: America’s hospitals.

Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than gross domestic product, inflation and wage growth. Spending on hospitals represents 44 percent of personal expenses for the privately insured, according to Rand.

A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42 percent from 2007 to 2014 for inpatient care and 25 percent for outpatient care, compared with 18 percent and 6 percent for physicians.

So why have politicians on both the left and right let hospitals off scot-free? Because a web of ties binds politicians to the health care system.

Every senator, virtually every congressman and every mayor of every large city has a powerful hospital system in his or her district. And those hospitals are as politically untouchable as soybean growers in Iowa or oil producers in Texas.

As hospitals and hospital systems have consolidated, they have become the biggest employers in numerous cities and states. They have replaced manufacturing as the hometown industry in a number of rust-belt cities, including Cleveland and Pittsburgh.

Can Kamala Harris ignore the requests of Sutter Health, Kaiser Permanente, U.C.L.A. or any of the big health care systems in California? Can Elizabeth Warren ignore the needs of Partners HealthCare, Boston’s behemoth? (Bernie Sanders may be somewhat different on this front because Vermont doesn’t have any nationally ranked hospitals.)

Beyond that, hospitals are often beloved by constituents. It’s easy to get voters riled up about a drug maker in Silicon Valley or an insurer in Hartford. It’s much riskier to try to direct their venom at the place where their children were born; that employed their parents as nurses, doctors and orderlies; that sponsored local Little League teams; that was associated with their Catholic Church.

And, of course, there’s election money. Hospital trade groups, medical centers and their employees are major political donors, contributing to whichever party holds power — and often to the out-of-power party as well.

To defend their high prices, medical centers assert that they couldn’t afford to operate on Medicare payments, which are generally lower than what private insurers pay. But the argument isn’t convincing.

The cost of a hospital stay in the United States averaged $5,220 a day in 2015 — and could be as high as over $17,000, compared with $765 in Australia. In a Rand study published earlier this year, researchers calculated that hospitals treating patients with private health insurance were paid, overall, 2.4 times the Medicare rates in 2017, and nearly three times the rate for outpatient care. If the plans had paid according to Medicare’s formula, their spending would be reduced by over half.

Most economists think hospitals could do just fine with far less than they get today from private insurance.

While on paper many hospitals operate on the thinnest of margins, that is in part a choice, resulting from extravagance.

It would be unseemly for these nonprofit medical centers to make barrels of money. So when their operations generate huge surpluses — as many big medical centers do — they plow the money back into the system. They build another cancer clinic, increase C.E.O. pay, buy the newest scanner (whether it is needed or not) or install spas and Zen gardens.

If hospitals were paid less via regulation or genuine competition, they would look different, and they’d make different purchasing decisions about technology. But would that matter to medical results? Compared with their European counterparts, some American hospitals resemble seven-star hotels. And yet, on average, the United States doesn’t have better outcomes than other wealthy nations. By some measures — such as life expectancy and infant mortality — it scores worse than average.

As Uwe Reinhardt, the revered Princeton health economist who died in 2017, told me, “If you want to save money, you have to pay less.” That means taking on hospital pricing.

Elisabeth Rosenthal, a former New York Times correspondent, is the editor in chief of Kaiser Health News, the author of “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back” and a contributing opinion writer.

www.nytimes.com… 

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Comment:

By Don McCanne, M.D.

Certainly the insurance and pharmaceutical industries are appropriate targets as we try to explain to the public how we can dramatically improve the financing of health care so that it becomes more accessible and truly affordable for each and everyone of us. In this article, Elisabeth Rosenthal explains why we should be looking at the hospital industry as well.

Two of the most important reasons for our high health care costs are administrative excesses and high prices. Hospitals are guilty of contributing to high costs on both counts, primarily because they not only tolerate but actually support our highly flawed method of health care financing, while actively opposing a method that would reduce administrative waste and price gouging.

It is the private insurance industry that has been a major player in tolerating and perpetuating high health care prices, and, of course, their role in increasing the administrative burden for hospitals and the rest of the health care delivery system is infamous. The hospital lobbyists are actively supporting the private insurance industry.

The single payer Medicare for All model of health care financing would change the way we fund hospitals. Instead of paying itemized fees or DRGs for each patient and the various services and products that they utilize, under single payer hospitals would be funded through global budgets, much like we fund the fire department. We would be paying the legitimate costs of operating the facility rather than payments based on driving up both prices and volume of services. Also expansion of system capacity and addition of capital improvements would be separately budgeted based on community need, thus avoiding excess capacity that embodies the Romer rule (if you have an empty bed, it will be filled), while still ensuring adequate capacity for the community.

Right now the opponents to Medicare for All are emphasizing that individuals would lose their choice of private health plans, when that financing model is responsible for much of the waste, deficiencies, and inequities in our system. Our drumbeat needs to be louder on the true sources of high costs and inequities – the perpetrators of the administrative waste and high prices. We will not adequately address those until we change the financing system to single payer through an improved version of Medicare that truly includes everyone.

Why are the hospitals in bed with the insurers instead of with us? Money. They are being paid generously for the services they offer. They seem to dismiss financial hardship and personal bankruptcy for too many of their patients as simply a cost of doing business, but those hardships stem from the fact that they are doing business with the wrong people – the private insurers. That doesn’t mean that they won’t accept funds from the public insurers, especially Medicare and Medicaid, but they don’t see that as a source of huge surpluses that they can plow back into their systems, sometimes surrounding themselves with extravagance.

Of course, there are also hospitals in communities with high rates of poverty and excess numbers of uninsured and underinsured, and many of these hospitals struggle. Single payer Medicare for All would play an important role as the great equalizer, a role that underfinanced Medicaid and charity cannot fulfill.

We can do far better, but the public has to understand how.

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In nearly every congressional district, voters tell me that their top concern is health care. The high cost, the lack of access, the bureaucratic headaches – I hear these complaints in small towns, big cities, and suburbs from coast to coast. But these complaints, I realize, are symptomatic of a much more profound problem: our democracy is broken, and it seems that we have lost the ability to solve our collective challenges. Everywhere we go, we are meeting voters who have been disabused of the notion that our elected representatives are pursuing the public good, disabused of the quaint idea that our government is of the people, by the people, and for the people.

And yet, throughout our travels, this cynicism is being overcome by a different emotion. Hope. All around the country, we are meeting people who can see beyond this dark moment into the bright light of another world. For the first time in many decades, our national politics are being shaped not only by fear and hatred but also by our dreams for a better world. Each month, more organizers, activists, candidates, and elected officials are talking about reshaping American society in a radically humane way. This vision encompasses both negative and positive rights: freedom from unjust incarceration, racist policing, inhumane immigration enforcement, economic exploitation, sexual violence, and political disenfranchisement; and a set of public policies that gives up the freedom to thrive – debt-free education from pre-K through college, decent housing, the guarantee of a good job, clean energy, resilient and sustainable cities to call home, retirement security, and free and robust Medicare for all.

Focusing on the moment and immersing myself in the task at hand has been my salvation over the past two years. Peering into the future has been too dispiriting and too overwhelming. But there is so much to embrace in this very moment – so much work right here in front of us.

This is the message that I settled on somewhere between the cornfields of the Great Plains and the glistening waters of the Great Lakes: the notion that the cure to what ails American democracy is more American democracy; that our problems are created by people and that we can solve them only with people power; and that, as Rebecca Solnit teaches us, hope is not a lottery ticket that can deliver us out of despair, but a hammer for us to use in this national emergency – to break the glass, sound the alarm, and sprint into action.

What action? Voting is not nearly enough. This moment calls on us all to become organizers, to be heroes for our communities and future generations. To talk to our less political friends, neighbors, classmates, and coworkers and to enlist them in this experiment we call American democracy. This is our Congress, our country, and our future for the making.

https://www.simonandschuster.com…

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Comment:

By Don McCanne, M.D.

Most avid single payer advocates know Ady Barkan, if for no more than his testimony presented earlier this year to the Rules Committee of the House of Representatives, on single payer Medicare for All. As a young activist attorney, already admired in the progressive community for his other work on social justice issues, he literally risked his life to provide that testimony, due to the advanced paralytic stages of his amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease). Delivering the message to America of the importance of health care justice for all was too important to him to not take that risk, and drove him to go ahead and appear in his fragile, vulnerable state.

What does a man do who feels that he has so much left undone to advance social justice in this nation when he is told that he has a disorder that will quickly sap him of all of his strength and result in his rapid demise? This is what his book, “Eyes to the Wind,” is about – “a memoir of love and death, hope and resistance.”

His frustration is certainly evident, how could it not be? But his drive to do all that he can, and more, serves as an invaluable lesson for us all. When we see him accomplishing what he has, it should motivate us even more to advance the cause of social justice, and, for PNHP and our single payer colleagues, more specifically the cause of health care justice through Single Payer Medicare for All.

As he tells us, “This moment calls on us all to become organizers, to be heroes for our communities and future generations. To talk to our less political friends, neighbors, classmates, and coworkers and to enlist them in this experiment we call American democracy. This is our Congress, our country, and our future for the making.”

His words will be with us forever as they influence our actions.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Uwe Reinhardt, Ph.D.
JAMA, June 13, 2017

We can think of the extraordinarily high overhead imposed on insured individuals and patients in the United States as the price they seem to be willing to pay for the privilege of choice among health insurers and, for each insurer, among multiple different insurance products. US consumers seem so fanatic about this choice that to keep it, they have been willing to give up their erstwhile freedom of choice among physicians, hospitals, and other clinicians and health care facilities. Citizens of most other countries have made that trade-off in exactly the opposite direction.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

Uwe Reinhardt said it well – American patients seem to be willing to pay much more to have their choice of private insurers and their plans while relinquishing their choice of physicians, hospitals, and other clinicians and facilities. Based on polls that show that support for single payer Medicare for All declines if the option to choose private plans is eliminated, it would seem that patients are willing to pay much more to keep their options for private plans open.

Many in the political and policy communities and in the media keep telling us that we want to keep this option, of course without reminding us of the consequences of wasting close to 500 billion dollars on administrative excesses. But is this what we really believe?

Look at what happened when Rep. Stephen Lynch (D-MA) told his audience that Medicare for All works by taking away their employer-sponsored plans (24 second video, click speaker icon to turn on sound):

https://www.facebook.com…
(Thanks to Healthcare NOW)

Wow! People are beginning to understand that eliminating private insurance is an essential beneficial feature of single payer Medicare for All, not a disadvantage. We just have to send our message back, loud and clear, to the politicians, policy community and the media, just as this audience did.

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By Ken Janda and Vivian Ho
The Hill, August 27, 2019

The recent Democratic debates confirmed that universal access to health care insurance is a core issue for the 2020 election, although it’s difficult keeping up with all the proposals. “Medicare for All” gets the most press, but its cost may be prohibitive, and has no chance of surviving the health care industry lobbying in Congress.

Former Vice President Joe Biden and Mayor Pete Buttigieg want to bolster the Affordable Care Act by creating a new “public option” within it. Sen. Kamala Harris has introduced a proposal to include Medicare Advantage alongside the publicly run Medicare program.

All of these suggestions seem to involve huge risks, making a complex system even more so. And from the Republican side, we have absolutely no proposals. So where is the bold new idea that could actually happen? How do we build on what’s already working well, cover everyone, simplify administration and find a path that limits cost increases to the same rate as GDP growth or lower? Maybe it’s time for “Medicare Advantage for All.”

Currently over 20 million Americans who are eligible for Medicare have chosen the private insurance alternative to traditional Medicare called Medicare Advantage. That’s about 35 percent of all Medicare-eligible seniors, and this percentage rises every year. Most Republicans support Medicare Advantage, including the Trump administration. Let’s build on that popular program’s success.

Medicare Advantage plans are individually selected by people based on cost, personal risk tolerance, network provider options and customer service. Americans like choices, and Medicare Advantage offers multiple choices along with a minimum safety net level of coverage. Medicare Advantage plans avoid the confusion of Medicare Part A, Part B, Part D and Medicare supplements since they cover all those elements and usually more. Most seniors have more than a dozen Medicare Advantage options to choose from. These plans cover all the services and benefits of Medicare, often with lower deductibles and copayments plus enhanced benefits. It’s no wonder these plans are popular. The primary trade-off for the consumer is a requirement to utilize the carrier’s contracted provider network, similar to what virtually all employer-sponsored insurance requires. In fact, Medicare Advantage HMO or PPO plans are offered by the same companies that provide individual and employer-sponsored insurance around the country.

The second rapidly growing segment of American health insurance is the individual marketplace under the ACA. The benefits offered in the marketplace, the companies offering those plans and the way the Center for Medicare and Medicaid Services regulates those plans is similar to Medicare Advantage. These markets could easily be merged.

New federal regulations beginning in January 2020 will allow employers to move away from picking a “one size fits all” group insurance plan for their employees to a “defined contribution” approach. Employees would use employer funds via a health reimbursement account to purchase an individual policy under the ACA’s marketplace that, again, looks a lot like a Medicare Advantage plan.

Over 80 percent of all Medicaid recipients are currently enrolled in Medicaid managed care, where they choose a private insurance company to provide all Medicaid benefits via an HMO network that, you guessed it, looks a lot like a Medicare Advantage plan with limited or no cost-sharing.

We are already on our way to Medicare Advantage for All, but we are not doing it systematically or thoughtfully. A move to Medicare Advantage for All is achievable in a relatively short time frame, without the disruption and risk of Medicare for All, or without the confusion of even more options and funding mechanisms. The majority of Americans who have employer-sponsored insurance would still have it. And Medicaid becomes mainstream.

All Americans would have multiple choices of networks, carriers and benefit levels. All Americans would have incentives for consumerism and healthy behaviors. Cost growth would slow, as more people would receive coverage under Medicare, with an average annual growth rate per enrollee of 1.5 percent since 2010 versus 4.5 percent for the privately insured.

No big tax increases would be needed. Employers would continue to fund much of the cost, just as they do in defined contribution retirement plans. We could dramatically reduce the administrative burdens on patients and providers, as the processes would be the same whether you are young, old, rich, poor, subsidized or not.

With Medicare Advantage for All, we would be building on and improving the current system rather than blowing it all up and starting over. We could cover everyone, improve health outcomes, improve patient experience and stop the increase in health costs under Medicare Advantage for All. Republicans should love the free market approach, Democrats should embrace the opportunity to improve the ACA and Americans of all stripes should support a pragmatic and achievable path to universal coverage. We hope something this reasonable will survive our current political process.

Ken Janda is the principal of Houston-based consulting firm Wild Blue Health Solutions, adjunct professor at Rice University’s Jones Graduate School of Business and a former health insurance CEO. Vivian Ho is the James A. Baker III Institute Chair in Health Economics at Rice’s Baker Institute for Public Policy, director of the institute’s Center for Health and Biosciences and a professor of economics at Rice.

https://thehill.com…

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Comment:

By Don McCanne, M.D.

It has long been the dream of conservatives and some moderates to convert Medicare into a “premium support” program. Basically, the government would provide the Medicare beneficiary with the equivalent of a voucher – the premium support – a defined amount of funds that would be combined with the beneficiary’s own funds to purchase a plan from a market of private Medicare Advnstage plans. This would convert Medicare from the traditional defined benefit health program into a defined contribution. This would allow the government to limit its health care spending to the defined contribution while passing the risk of increasing health care costs onto the beneficiaries.

We are already partway there. The private Medicare Advantage plans were established to become the market in which the premium support vouchers could be used. Great efforts have been made to promote these plans by overpaying them for the additional benefits that they use to attract Medicare beneficiaries, including a reduction in cost sharing requirements plus the establishment of a limit on catastrophic spending that the traditional program does not have. The plans have further benefited by marketing to healthier, less costly beneficiaries, and by upcoding to increase the risk adjustment payments. They now cover up to 40 percent of those eligible and that is increasing, so it should not be too long before they can introduce the premium support phase of the scheme.

Although the label “Medicare for All” was designed to refer to a single payer version of an improved and expanded Medicare program that covered everyone, it has now been usurped by those supporting other versions of health care financing reform. Particularly, there has been a strong drive to rally support for including in reform the traditional health plans, especially employer-sponsored plans. Some have suggested that these traditional plans could become private Medicare Advantage plans. Also there has been some support for building on the Affordable Care Act by improving the exchanges (marketplaces) established by the legislation. It has been noted that such markets also resemble the Medicare Advantage markets and thus they also could be included in a unified market.

Last week, in a Quote of the Day message, an effort was made to raise the alarm about the Trump administration’s new rule ordering more flexibility in employers’ use of health reimbursement arrangements (HRAs), making them ideal for defined contribution financing of plans selected from the non-group market. Once again it has been noted in today’s article that Medicare Advantage plans would be ideal to fulfill that role, as well while touting the defined contribution approach.

The authors of today’s op-ed also contend that, since much of Medicaid has already been converted into Medicaid managed care plans, they already resemble Medicare Advantage plans.

See a pattern here? Shift traditional Medicare into the private Medicare Advantage market and fund it with defined contribution premium support vouchers. Shift Medicaid managed care into this market. Move employer-sponsored plans into the Medicare Advantage market, funded through defined contribution HRAs. Move the ACA plans into the Medicare Advantage market. Then you will have 18 percent of our economy becoming part of The Great Risk Shift (Hacker) – shifting more of the cost of health care to the masses while relieving the very wealthy of their moral obligation to return some of their excess wealth that they accumulated by extracting “rents” from the workers responsible for our increased national productivity.

That is beside the fact that Medicare Advantage for All would perpetuate the profound administrative waste, inefficiencies, excessive cost sharing, narrow provider networks, and other inequities of a system that would be affordable only for the wealthiest of us. But this is the clear path we are already headed down, and our momentum is building as we shoot ever faster down this path. We can still convert to a single payer version of Medicare for All, but the difficulty of doing so is compounding day by day because the incremental changes taking place are locking in policies that support the private Medicare Advantage for All model, or something very close to it.

Caveat emptor.

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By Philip Marcelo
Associated Press, August 26, 2019

The Trump administration has eliminated a protection that lets immigrants remain in the country and avoid deportation while they or their relatives receive life-saving medical treatments or endure other hardships, immigration officials said in letters issued to families this month.

Critics denounced the decision as a cruel change that could force desperate migrants to accept lesser treatment in their poverty-stricken homelands.

In Boston alone, the decision could affect about 20 families with children fighting cancer, HIV, cerebral palsy, muscular dystrophy, epilepsy and other serious conditions, said Anthony Marino, head of immigration legal services at the Irish International Immigrant Center, which represents the families.

Advocates say similar letters from Citizenship and Immigration Services have been issued to immigrants in California, North Carolina and elsewhere.

“Can anyone imagine the government ordering you to disconnect your child from life-saving care — to pull them from a hospital bed — knowing that it will cost them their lives?” Marino said.

“This is a new low,” Democratic Sen. Ed Markey said. “Donald Trump is literally deporting kids with cancer.”

A Citizenship and Immigration Services spokeswoman said the policy change was effective Aug. 7.

It affects all pending requests, including from those seeking a renewal of the two-year authorization and those applying for the first time. The only exception is for military members and their families.

Going forward, applicants will be able to seek deportation deferrals from a different agency, Immigration Customs and Enforcement, according to the spokeswoman.

Letters sent to Boston-area families last week and reviewed by The Associated Press, however, do not mention that option. They simply order applicants to leave the country within 33 days or face deportation, which can hurt future visa or immigration requests.

Without the discretionary deferrals, immigrant families facing serious health issues have few other options for relief, medical experts in Boston argued Monday.

The deferrals, they added, do not provide families a pathway to citizenship, though they can qualify for government-funded health benefits and receive legal permission to work while their children receive medical treatment.

“They’re not coming for a free ride. They’re coming to save their children,” said Joe Chabot, a director at the Dana-Farber/Boston Children’s Cancer and Blood Disorders Center. “It’s bewildering.”

https://www.apnews.com…

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Comment:

By Don McCanne, M.D.

We can be proud of an America that welcomes those with major health care needs, especially children, who are not able to obtain their essential and often lifesaving medical treatments in their home countries. Except let’s dispense with pride since apparently we do not have that America anymore.

Under a well designed, single payer Medicare for All program, most of us believe that all residents, regardless of immigration status, should have the health care that they need. Even now, before the enactment and implementation of such a program, surely we can provide this assistance that they cannot get at home. Wouldn’t that be an appropriate role for government? Apparently our current government stewards think not.

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By Florien M. Kruse, MPP; Stef Groenewoud, PhD; Femke Atsma, PhD; Onno P. van der Galiën, MSc; Eddy M. M. Adang, PhD; Patrick P. T. Jeurissen, PhD
HSR – Health Services Research, August 20, 2019

Abstract

Objective: To identify differences between independent treatment centers (ITCs) and general hospitals (GHs) regarding costs, quality of care, and efficiency.

Data Sources: Anonymous claims data (2013‐2015) were used. We also obtained quality indicators from a semipublic platform.

Study Design: This study uses a comparative multilevel analysis, controlling for case mix, to evaluate the performance of ITCs and GHs for patients diagnosed with cataract.

Data Collection: Reimbursement claims were extracted from existing claims databases of the largest Dutch health insurer. Quality indicators were obtained by external agencies through a mixed‐mode survey.

Principal Findings: There are no stark differences in complexity of cases for cataract care. ITCs seem to perform surgeries more frequently per care pathway, but conduct a lower number of health care activities per surgical claim. Total average costs are lower in ITCs compared with GHs, but when adjusted for case mix, the differences in costs are lower. The findings with the adjusted quality differences suggest that ITCs outperform GHs on patient satisfaction, but patients’ outcomes are similar.

Conclusion: This finding supports the postulation—based on the focus factory theory—that ITCs can provide more value for cataract care than GHs.

Selected quotes from the Introduction:

In several health care systems, ITCs are more profit‐oriented than general hospitals (GHs).

ITCs seem to embody to a greater extent the theoretical concept of the focus factory. This theory postulates that harmonizing the care portfolio and specialization would lead to better performance due to repetition, experience, and homogeneity of tasks.

ITCs would theoretically achieve more value for the same procedure compared with full‐service hospitals.

In many countries… policy makers became more receptive toward ITCs, since many health care systems opted for a more market‐driven system.

In the United States, the number of Medicare‐certified ITCs (called independent Ambulatory Surgery Centers in the US) doubled between 1991 and 2001 (1460‐3371), but recently this growth has slowed down.

Some empirical evidence on the relative performance of ITCs exists, most of which comes from the United States. However, comparative studies scrutinizing cost and quality simultaneously are lacking. The studies that analyzed quality of care either find equivocal results or find no clear medical quality advantages for ITCs over full‐service hospitals.

Findings from both the UK and the US suggest that ITCs might be cherry‐picking and treat less‐complex patients compared with hospitals.

From the demand side, it seems that the characteristics of patients seeking care from ITCs differ from those of patients seeking care from hospitals. The independent sector in the UK historically serves the interests of private practices of NHS consultants and target a more affluent clientele with additional amenities and shorter waiting lists.3, 20 Also in the United States, patients who are not insured via Medicaid more often chose to visit an ITC.

People with an indemnity health care insurance package will probably be more inclined to opt for ITCs. These insurance packages cover ITC care even when the ITC has no contract from this respective health insurer. From this perspective, people who could afford a more indemnity health care insurance package—people with a higher socioeconomic status (SES)—might have better access to ITCs. However, a recent report found no relationship between income and the choice for those insurance coverage that limits the choice of health care providers. Another reason why there might be a certain selection of patients visiting ITCs is that, according to guidelines set by the Dutch health care inspectorate, ITCs should refrain from treating patients of ASA (American Society of Anesthesiologists) type III, which are patients with severe systemic diseases.

In 2006, the Netherlands implemented a number of market‐oriented reforms of the health care system and the ITC enterprises subsequently grew. The focus factory theory would predict that ITCs would provide better value, but there remains uncertainty as to whether ITCs really do outperform GHs.

Selected quotes from the Results:

Patient characteristic statistics illustrate that there are small differences in the complexity of patients for cataract care between ITCs and GHs. The mean age is lower in ITCs. The percentage of patients who are 85 years or older is much lower in ITCs than GHs. The average number of chronic conditions illustrate that ITCs’ patients have less comorbidity, and the average number of patients with diabetes indicates possible lower ocular comorbidity. The average SES (socioeconomic status) of patients going to ITCs is higher compared with GHs. Glaucoma is the only indicator that suggests that ITCs might be treating a more complex patient group since in ITCs the number of patients with glaucoma is higher compared with GHs.

The DRG prices, which the insurer negotiates with ITCs, are substantially lower for cataract surgery than prices for GHs: on average 85.9 euros less for standard cataract surgery and 140 euros for complex cataract surgery. For patients with one cataract operation, the total cost differences are on average 94 euros per care pathway, and for patients with two cataract operations, this gap widens to 187 euros—both accounting for approximately 8 percent in cost savings.

Efficiency in this study is defined as the number of activities in a surgical claim, where fewer activities are perceived as more efficient. Results in Table 3 suggest that ITCs are more efficient in providing cataract surgery. ITCs carry out fewer health care activities within each surgical cataract DRG compared with GHs.

ITCs seem to perform better on patient satisfaction compared with GHs, but there are no differences in the patient‐reported outcomes after cataract surgery.

Selected quotes from the Discussion:

Total costs of cataract claims are lower for ITCs compared with GHs, although the adjusted cost differences are somewhat smaller than the unadjusted costs. Lower costs seem to be partly driven by lower negotiated prices, since ITCs tend to have a slightly higher number of claims per cataract care pathway. Our findings suggest that ITCs are able to offer those lower prices for cataract surgery, due to performing less health care activities within cataract surgical claims and through more intense use of optometrists. In addition, lower fixed costs (eg, lower overhead) and perhaps lower margins could be other reasons why cataract ITCs are able to offer lower prices.

The quality indicators used in this study were not optimal.

There is a risk that our proxy for efficiency—the number of health care activities—might not fully capture the differences in the resources used since this could vary by the different health care activities.

…whether suppliers induce demand. Several studies from the United States have indicated that this is sometimes the case, particularly among physician‐owned health care providers. Based on our own estimation, of the ITCs contracted for cataract care, 68 percent are physician‐owned. The phenomenon of supplier‐induced demand could very well affect the Dutch physician owners.

… we have found that ITCs more often carry out two cataract operations per care pathway than GHs. It is beyond the scope of this study to assess whether this indicates that ITCs are undertaking unnecessary cataract operations but it does raise concerns which merits further investigation.

This study cannot exclude the possibility of upcoding practices. Our findings do hint toward concerns of this sort.

The role of ITCs within future health care systems is still up for debate. Currently, GHs need to continue providing elective ambulatory care surgery if they are to ensure their long‐term financial survival; therefore, GHs will likely resist the reallocation of these services to ITCs.

For those interested in more details, this is an open access article available at the following link:
https://onlinelibrary.wiley.com…

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Comment:

By Don McCanne, M.D.

Those supporting market approaches for health care financing frequently cite shopping for Lasik eye surgery as an example of how well the market works in supposedly keeping prices down, though this is not really a good example to study the role of ambulatory surgical centers since Lasik is not covered by insurers. However, cataract surgery is an essential health care service and is covered by private and public health plans, so this study gives us a better idea about the role of ambulatory surgical centers as opposed to general hospitals. So what are we learning here?

Costs might be slightly lower in the surgical centers and the results on quality remain inconclusive. Just as we’ve known from past experience the centers tend to care for less complex patients who are younger and healthier and have a higher socioeconomic status – features that improve the bottom line for these largely for-profit facilities. Also they do not have to produce higher margins that the general hospitals must have to meet the institutional costs of a full service facility.

A well designed single payer system uses central planning with separate budgeting of capital improvements. It is in this process where appropriate decisions can be made that best serve the interests of the community. If there is a rationale for a surgical suite in a large urban ophthalmology practice it should not be based on cherry-picking, cream-skimming, lemon-dropping, or profit-potential in a patient population limited to those with a higher socioeconomic status, with unprofitable, more complicated patients of lower socioeconomic status being dumped on the community hospital. If the ophthalmologists want a state-of-the-art operation suite, they need to make sure that it is available for all ophthalmology patients, and all credentialed ophthalmologists, wherever it is located.

And Lasik patients? Until it is decided that Lasik should be a benefit that is covered by a universal public program, no public funds – directly or indirectly – should be used to care for them. They can go out and see what the market can do for them (but, warning, without federal funds, it will be very expensive).

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By Kritee Gujral, Anirban Basu
National Bureau of Economic Research, August 2019

This paper examines the impact of California’s hospital closures occurring from 1995-2011 on adjusted inpatient mortality for time-sensitive conditions: sepsis, stroke, asthma/chronic obstructive pulmonary disease (COPD) and acute myocardial infarction (AMI). Using a difference- in-difference approach on California’s Office of Statewide Health Planning and Development (OSHPD) data, the impact of hospital closures on inpatient mortality is estimated. Outcomes of admissions in hospital service areas (HSAs) with and without closure(s) are compared before and after the closure year. The paper aims to fill gaps in prior work by using a reconciled list of California’s hospital closures and by studying differential impacts of rural and urban hospital closures. To our best knowledge, this is also the first paper explicitly studying patient outcomes of California’s rural closures. Results suggest that when treatment groups are not differentiated by hospital rurality, closures appear to have no measurable impact. However, estimating differential impacts of rural and urban closures shows that rural closures increase inpatient mortality by 0.46% points (an increase of 5.9%), whereas urban closures have no impact. Results differ across diagnostic conditions; the general effect of closures is to increase mortality for stroke patients by 3.1% and for AMI patients by 4.5%, and decrease mortality for asthma/COPD patients by 8.8%.

https://www.nber.org…

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Assuring continuing access to health care in rural America

By Paul Morton Ganeles
tucson.com, Aug 24, 2019

In his Aug. 22 op-ed, Dr. TK Kelly, an emergency medical MD, appropriately stressed the problems rural residents encounter when requiring emergency medical services. During my career, I served for some 28 years as a CFO in three major metropolitan teaching hospitals; a Medicare provider appeals judge and agency chairman appointed by the secretary of health and human services; and the founding director of finance for the Hospital Association of New York State (HANYS).

In that HANYS job, I periodically conferred with health-care financial executives from most other states. They would kid me when the topic of rural hospital concerns arose that I didn’t have to listen. I reminded them that I represented more than 100 rural hospitals — not just Big Apple hospitals — and that I had vital concerns about those isolated but essential health facilities.

While the headline for the Kelly op-ed related to a funding crisis for air medical services, his essay also cited the long-standing financial plight of small rural hospitals across America which often provide lifesaving emergency medical and maternal care for farmers and ranchers and their families and employees. Those individuals often lack adequate health insurance to pay for their care and/or air transportation in dire emergencies. Even if they have insurance, those programs rarely reimburse the costs of their service and place financial burdens on hospitals and air medical providers that threaten their survival.

Kelly observed that, in the past nine years, 102 rural hospitals across America closed, and three of those were in Arizona. Kelly affirmed, “access to health care in rural America is disappearing.” My experience with HANYS in the early 1970s and since then validates Kelly’s observation and proves that the plight of rural hospitals has plagued America for more than 40 years.

Congress long ago recognized that rural health-care access and financial survival problem years ago as it enacted laws to tweak Medicare rural hospital reimbursement. Congressional actions consistently have proven to be inadequate to solve the problem because of the arcane black-box algorithms that underlie Medicare reimbursement rules.

During the experiences of my career in health care, which emphasized the costs of health care and how to cover them while providing those who need access to quality health services and with a variety of health-care funding mechanisms, I long ago concluded that America would not be able to effectively cope with the need to provide adequate access to quality care for all Americans until it scrapped its fragmented insurance and medical financing methods and adopted a single-payer insurance system (like a version of Medicare for All). The cost of covering everybody would be met by substantially reducing administrative expenses (the arcane coding and billing systems are virtually a total waste), by eliminating health-care and insurance advertising expenses, by eliminating profits, and by eliminating the obscenely exorbitant levels of compensation paid to health-care and insurance executives.

Enough studies have proven that America will be able to meet its health-care needs under a single-payer program while reducing total costs (premiums, copayments, deductibles, etc.) to every American.

That thesis also has been proven by the actual experiences of the world’s leading nations, which incur lower costs and better health-care outcomes than the U.S. to provide access to adequate health-care services not only to every resident but also, in many cases, to every visitor.

https://tucson.com…

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Comment:

By Don McCanne, M.D.

Closing rural hospitals increases mortality, by 5.9% according to this study. That’s not good.

In his op-ed, Paul Morton Ganeles – an experienced executive who understands rural hospitals – states, “I long ago concluded that America would not be able to effectively cope with the need to provide adequate access to quality care for all Americans until it scrapped its fragmented insurance and medical financing methods and adopted a single-payer insurance system (like a version of Medicare for All).”

He also notes, “Congressional actions consistently have proven to be inadequate to solve the problem because of the arcane black-box algorithms that underlie Medicare reimbursement rules.” Of course, that is a major reason why we need an improved Medicare for All.

We keep providing evidence of the superiority of the single payer model of Medicare for All – a method of health care financing that is more effective, more efficient and more equitable than all others – truly affordable for each of us. So why are we even discussing lesser, fragmented and dysfunctional models such as ACA and employer-sponsored plans? They tell us that it is because people should have their choice of these less effective, less efficient, less comprehensive, and less equitable plans, if they want them. But who would really want them if they truly understood the differences?

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By Rishi K Wadhera, Karen E Joynt Maddox, Dhruv S Kazi, Changyu Shen, Robert W Yeh
BMJ, August 12, 2019

Abstract

Objective: To determine any changes in total hospital revisits within 30 days of discharge after a hospital stay for medical conditions targeted by the Hospital Readmissions Reduction Program (HRRP).

Design: Retrospective cohort study.

Setting: Hospital stays among Medicare patients for heart failure, acute myocardial infarction, or pneumonia between 1 January 2012 and 1 October 2015.

Participants: Medicare fee-for-service patients aged 65 or over.

Main outcomes: Total hospital revisits within 30 days of discharge after hospital stays for medical conditions targeted by the HRRP, and by type of revisit: treat-and-discharge visit to an emergency department, observation stay (not leading to inpatient readmission), and inpatient readmission. Patient subgroups (age, sex, race) were also evaluated for each type of revisit.

Results: Our study cohort included 3 038 740 total index hospital stays from January 2012 to September 2015: 1 357 620 for heart failure, 634 795 for acute myocardial infarction, and 1 046 325 for pneumonia. Counting all revisits after discharge, the total number of hospital revisits per 100 patient discharges for target conditions increased across the study period (monthly increase 0.023 visits per 100 patient discharges (95% confidence interval 0.010 to 0.035)). This change was due to monthly increases in treat-and-discharge visits to an emergency department (0.023 (0.015 to 0.032) and observation stays (0.022 (0.020 to 0.025)), which were only partly offset by declines in readmissions (−0.023 (−0.035 to −0.012)). Increases in observation stay use were more pronounced among non-white patients than white patients. No significant change was seen in mortality within 30 days of discharge for target conditions (−0.0034 (−0.012 to 0.0054)).

Conclusions: In the United States, total hospital revisits within 30 days of discharge for conditions targeted by the HRRP increased across the study period. This increase was due to a rise in post-discharge emergency department visits and observation stays, which exceeded the decline in readmissions. Although reductions in readmissions have been attributed to improvements in discharge planning and care transitions, our findings suggest that these declines could instead be because hospitals and clinicians have intensified efforts to treat patients who return to a hospital within 30 days of discharge in emergency departments and as observation stays.

Discussion

In this study of Medicare beneficiaries admitted to hospital for heart failure, acute myocardial infarction, and pneumonia in the US between 2012 and 2015, we found an increase in total hospital revisits within 30 days of discharge despite a reduction in 30 day readmissions. This increase was because of a rise in treat-and-discharge visits to an emergency department and observation stays within 30 days of discharge, which on national level, exceeded the decline in readmissions. Our finding of increased healthcare use during this period was more pronounced after we included all encounters within 30 days of discharge from the index hospital stay—rather than simply including the first revisit.

In the US, nationwide reductions in readmission rates for medical conditions targeted by the HRRP have been viewed as markers of improvements in quality of care. Our findings suggest that this success could be illusory because total hospital revisits after discharge are, in fact, rising. If reductions in readmissions were being driven by widespread improvements in discharge planning, care transitions and post-discharge care after a hospital stay (as intended by the HRRP), total hospital revisits within 30 days of discharge would also be expected to decline. Instead, much of the reduction in readmissions seems to reflect intensified efforts to manage patients who return to a hospital after discharge in observation units and emergency departments, potentially because the 30 day readmission measure used to evaluate hospital performance under the HRRP does not include these types of post-discharge encounters. These observations perhaps explain why previous studies have shown that inpatient quality of care delivered to patients admitted to hospital for heart failure or acute myocardial infarction do not differ at hospitals with high versus low readmission rates.

The increase in use of observation stays and emergency department visits (compared with inpatient hospital stays) among patients who return after discharge could be a good thing if it reflects that patients are, on average, returning with lower severity illness that can be safely managed in a non-admission setting. These revisits could also be beneficial to patient care. For instance, observation stays have been associated with higher patient satisfaction than inpatient hospital stays, although they can also result in higher out-of-pocket expenditures and more financial hardship for patients than inpatient hospital stays.

However, the increasing use of emergency department visits for post-discharge care could be problematic. Data have suggested that hospitals that tend to manage patients in emergency departments rather than admitting them for an inpatient stay have higher rates of early death after discharge. We observed no change in post-discharge mortality at 30 days for target conditions during the HRRP (from 2012 to 2015). However, several independent analyses have found that the implementation of the HRRP was associated with an increase in post-discharge mortality at 30 days among patients admitted for heart failure and pneumonia compared with pre-HRRP trends (pre-2010), and that this increase was concentrated entirely among patients not readmitted after discharge. Whether intensified efforts to manage returning patients in emergency departments and observation units explain increases in mortality observed in the years that preceded our study period is an important area for further research, given that this potential mechanism could explain increased mortality under the HRRP.

https://www.bmj.com…

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Comment:

By Don McCanne, M.D.

Various policy innovations today are designed to try to reduce health care spending while supposedly improving quality, or at least not impairing it. This is one of those innovations. The Hospital Readmissions Reduction Program assesses financial penalties if patients are readmitted within thirty days of discharge.

In this study they looked at patents with heart failure, acute myocardial infarction, and pneumonia. These are patients who generally are quite ill. With the best of care, their post-discharge status can easily worsen thus warranting readmission to the hospital. Yet this is one more study that showed that, with the disincentive of a financial penalty, instead of being readmitted, the patients were often managed in emergency departments or under observation. In fact, the rise in post-discharge emergency department visits and observation stays exceeded the decline in readmissions. The authors also report, “hospitals that tend to manage patients in emergency departments rather than admitting them for an inpatient stay have higher rates of early death after discharge.” Also we should be very concerned about this statement buried in the abstract: “Increases in observation stay use were more pronounced among non-white patients than white patients.”

Although the prices charged may be different between a patient held in a hospital bed for observation as opposed to one formally admitted, it is likely that the actual costs of care rendered are not that much different, so are we really saving much money by this policy? Also patients are penalized if they are held under observation instead of being admitted since cost sharing is greater for outpatient services than it is for a readmission.

The shame is that the policy community and bureaucrats busy themselves with these experiments in policy innovations that largely provide disappointing results, while they reject any consideration of a policy innovation that would recover hundreds of billions of dollars in administrative waste: the single payer model of an improved Medicare for All. What drives this? Incompetence? Greed? Ego? Insanity? Whatever it is, we need to address it so that we can get on with reform that really does work.

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