Troubled hospitals, troubled health care system: Not just in Brooklyn

By Joshua Freeman, M.D.
Medicine and Social Justice blog, Nov. 15, 2011

In Seeking a Cure for Troubled Hospitals in Brooklyn (New York Times, Nov. 10), Nina Bernstein reports on the challenges faced by not-for-profit hospitals in that part of New York City.

In 1980, she notes, Brooklyn had 26 hospitals, while now it has 15. It has 41 percent fewer acute-care beds, with a ratio of 2.1/1,000 people (national average: 2.6, NY State 3.1, Manhattan 4.7). Five of the largest remaining hospitals are in danger of closing; these hospitals account for 83,000 admissions, 325,000 emergency room visits, and 760,000 clinic visits per year.

There is no way, the article makes clear, that the three public (2 city and 1 state) hospitals in the borough can come close to making up this deficit should those hospitals close. But they may, because they are running in the red, and there is no reason to think that, even if President Obama’s health reform stays intact, this will change. They largely care for Medicaid patients, and Medicaid both doesn’t pay enough to cover a hospital’s costs, and is targeted for cuts because it accounts for such a large portion of state budgets.

The reason is that these hospitals care for poor people, as the original title of the article in the Times’ print edition, “Brooklyn’s ailing hospitals and care for the poor,” made clear. The problem, however, is not unique to Brooklyn; it confronts hospitals all over the country.

“Brooklyn shows the acute stage of a problem that has vexed the nation for years: how to sustain delivery of major medical care to the poor,” Bernstein writes. Even more, the fact that increasing portions of the population are uninsured or poorly insured, and that the focus in of the federal deficit reduction process is to further cut payments for Medicare as well as Medicaid, the trend is likely to continue and to increase.

From the point of view of hospitals, the issue is whether they will survive or not survive, largely dependent upon where they are located and their ability to attract the decreasing number of well-insured patients. While those who run successful hospitals like to congratulate themselves on being such good managers, the article notes the observations of Alan Sager of Boston University, a longtime student of hospital closings across the country, that “what best predicted that a hospital would be closed was not inefficiency, but location in a minority neighborhood.”

This is not at all surprising; indeed, it tracks with everything else that has been going on in our society: services for the most needy are cut back and ultimately disappear, while services for the least needy get more and more available, marketed, extensive (and expensive) as providers of those service seek to make themselves attractive to a shrinking, privileged market.

The problem is that for this to be OK, one has to accept the idea that health care access should be determined by the market, rather than that they should be available for everyone in the society. This means that hospitals will close, and providers will not practice, in areas that have high concentrations of people who are poor, uninsured, underinsured, and members of minority groups.

But those hospitals that do survive, in higher-income neighborhoods, will compete in the areas that are high-profit “product lines” so that they, and not their competitors, will attract that market segment.

Such product lines can include elective and cosmetic surgery, but they also include areas such as heart disease and cancer care because payers (driven by the federal payer, Medicare) reimburse hospitals at rates far above their costs for providing care for these conditions, but not for others. Thus, capacity is overbuilt, resulting in greater capacity (for example, for cancer treatment for the insured) than is needed for the population because each hospital wants to be the one who makes the big markup on chemotherapy drugs.

But, of course, there is much less access to care for the same conditions for people without insurance, or even for those whose conditions are not in the “high profit” group. And the lack of access to preventive care, to primary care, to care of conditions in their more treatable stages, means that the people who enter the “ailing hospitals” of Brooklyn or elsewhere, are farther along in their diseases and more expensive to treat, so that caring for them drives the hospitals deeper into debt. And this creates a downward spiral.

For a patient described in the article, “surgery revealed a strangulated hernia so far gone that cutting out life-threatening infected tissue left an open wound…but before Mr. Hutchins could be released, the hospital had to get him a portable wound pump. At hospitals that pay suppliers promptly, administrators say, the device typically gets same-day delivery. At Wyckoff, it took a week.” And, since “last year, Medicaid cut by 31 percent what it would pay for a case like his,” the hospital loses even more money providing his care for an extra week.

In poor neighborhoods, almost all services have more limited availability. This may make sense, say, for upscale restaurants, or clothing stores. It is much more problematic when those communities do not have food stores. Or health care.

It is, however, the result of applying a competitive market model to health care, leading to overcapacity for a portion of the population and a deficit or absence of care for another part of the population (based on wealth, location, and type of condition).

This is why most other countries with the resources have made the decision to provide access to health care to all their people, rather than ration based on the market, which by definition leaves out the people at the bottom who cannot pay. Our health care non-system reinforces these inequities, which are more than unfair – they sap the ability of our country to have a healthy and productive workforce.

There are solutions, but not the ones being suggested by some for Brooklyn (“expunge the hospitals’ debt of more than $1 billion, partly at taxpayer expense, and then let large for-profit companies take over the facilities and restructure patients’ care”), which sounds an awful lot like “bail out the bankers and financiers with public funds.”

The solutions are to create a national health system, a system which guarantees health care access for everyone. Most cost effectively, a single-payer system. It can be done, for not much more than we now spend, because of the excess waste and profit built into our reimbursement methodology. It can be driven by the federal government because the federal government is the largest payer for health care.

In an article on the reopening of the national physician database (After protests, national doctor database reopens — with a catch), Alan Bavley of the Kansas City Star quotes Senator Chuck Grassley, an Iowa Republican, as saying “This agency needs to remember that half of all health care dollars in the United States comes from taxpayers, so the interpretation of the law ought to be for public benefit.”

That half of all health care dollars is as much, on a per-capita basis, as most other OECD countries spend altogether, and it is what drives reimbursement (for cancer chemotherapy or diabetes or asthma) in this country. It would be great if Sen. Grassley would take the lead in ensuring that not only the physician database, but all of health care services provided with dollars from taxpayers, is “for public benefit” and not private profit.

The general counsel for one of the threatened Brooklyn hospitals is quoted by Bernstein as saying, “We stay open at the grace and generosity of our vendors. They know it will eventually get better, because we have to have hospitals. Otherwise, we’ll have sick and dying people lying in the stre
ets, and nobody wants that.”

But the solution is not just to patch up Brooklyn’s, or anywhere else’s, acute problems; it is to fix the broken system and perverted incentives.

Dr. Joshua Freeman is chairman of the department of family medicine at the University of Kansas School of Medicine and a member of Physicians for a National Health Program (www.pnhp.org). This is a slightly revised version of Dr. Freeman’s blog at http://medicinesocialjustice.blogspot.com/2011/11/troubled-hospitals-troubled-health-care.html