Hospital Administrators Must Control Costs Too

In the era of skyrocketing costs in healthcare, it is ashame we have to learn of hospital administrators engaging in practices that may restrict competition among hospital suppliers in an interesting "summit" held in Colorado recently. These practices are not unique to medicine, but given the fact that the employer-based health care system is all but dead, such largess with questionable restriction-of-trade implications, will soon have to end.

Mr. Andy Stern, President of the Service Employees International Union commented inthe WSJ today about the death of employer-based healthcare:

"CEOs know this best: They dread the meeting with HR managers who tell them, once again, that their health-care costs are through the roof. So they look for any way to control costs. Co-pays go up, subsidies go down, coverage is dropped all together. In the last five years alone, the percentage of businesses offering health benefits has plummeted to 60% from 69%. Here's how bad it will continue to get: McKinsey & Company projects that by 2008, the average Fortune 500 company will spend as much on health care as they make in profit. How can we possibly compete in the global economy with that kind of burden?CEOs know this best: They dread the meeting with HR managers who tell them, once again, that their health-care costs are through the roof. So they look for any way to control costs. Co-pays go up, subsidies go down, coverage is dropped all together. In the last five years alone, the percentage of businesses offering health benefits has plummeted to 60% from 69%. Here's how bad it will continue to get: McKinsey & Company projects that by 2008, the average Fortune 500 company will spend as much on health care as they make in profit. How can we possibly compete in the global economy with that kind of burden?"

If CEO's and hospital administration help (and they'll have to), then perhaps a fix to the health care crisis will have a chance of succeeding. To do nothing is NOT an option. As Mr. Stern says:

"To fix health care in America, we have to accept that we're living through the most profound transformative economic revolution in the history of the world. It's happening so fast we can barely keep track of it. Intense global competition. Contingent work. The explosive economies of China and India. Technology in the workplace. Outsourcing. By the time they are 35, young people entering the job market today will already have worked in eight to 12 jobs. Employers will be pit stops for them, not permanent homes. In other words, we are rapidly moving from employer-managed work lives to self-managed work lives, in which workers must figure out on their own how to maintain things like health insurance and retirement."

And you can bet we won't tolerate wasted funds on plush trips to Colorado.

--Wes