Sunday, January 27, 2008

Hospital Wars

"With hospital costs already the biggest driver in overall health-care inflation, employers and insurers have serious concerns.

'Research clearly shows that the more hospital beds there are, the more costs are generated,' said Larry Boress, executive director of the Chicago Business Group on Health, a coalition of some of the area's largest employers, including Harris Bank, Abbott Laboratories and Sears, Roebuck and Co."
- Bruce Japsen, January 25, 2004, Chicago Tribune

"Nationwide, hospitals spent $24.5 billion on construction projects last year, U.S. Census figures show, up from $23.7 billion in 2005.

The five-year period from 2000-2005 saw a 47 percent increase in spending from the previous five-year period."

-Janet Kidd Stewart, March 19, 2007, Chicago Tribune

Here's Chicago's recent hospital construction costs:
Children's Memorial Hospital, Chicago, IL - $1 billion

University of Chicago Children's Hospital - $145 million

Loyola University Medical Center - $123 million

Northwestern's Prentice Women's Hospital - $500 million +.

Rush University Medical Center - $810 million

University of Illinois, Chicago - $326 million

Central Dupage Hospital $257 million

Condell Medical Center - $109 million

And yes, there's still many, many more.
These numbers make a travesty of the entire concept of a "Certificate of Need" states, of which Illinois is one. It is telling that the Illinois Department of Public Health has not updated their Hospital Capital Expenditures and Financial Information Report since 1999. Could it be the report would make a mockery of CON process as a means of controlling health care costs?

So what are the real "needs" for such construction?

Primarily, it is the "need" to attract the well-insured, affluent patient clientele from a high socioeconomic status.

Next, it is the "need" to attract the physicians and surgical groups with large well-insured, affluent patients in their practices.

Finally, it is the "need" to out-distance the competition - a sort of brick-and-mortar war between hospitals eager to compete for the almighty health care dollar: whether it be with other community hospitals or with physician-owned specialty hospitals.

Certainly, to their surrounding communities, large hospital projects are a billed as a source of civic pride, a monument to the great and wondrous miracles that occur in medicine every day. The development of incredible technlogies that permit unparallelled views inside the body or minimally-invasive robotic and nuclear techniques are a wonder to behold. But to the average Joe with common, chronic ailments like heart failure, diabetes, hypertension, renal disease or pulmonary disease - these centralized monoliths offer little additional for their exorbitant price tag. Except spas, flatscreen TV's, and an increased emphasis on running hospital foodservice departments as profit centers. And although hospitals offer some amount of uncompensated care to their communities, it usually comes at the expense of up-charging for services, which affects each of us.

Perhaps, too, the construction at non-profit hospitals serves as a convenient tax shelter should they become suddenly profitable.

Chicago is the third-largest city in the US behind New York and Los Angeles. But there are other large cities out there as well: Houston, Dallas, Atlanta, Birmingham (AL), San Francisco, St. Louis, Boston, Denver, Salt Lake City, Indianapolis, Minneapolis come to mind. What have the hospital construction costs been in these cities recently?

Maybe when we can no longer afford our insurance or gasp when we see exorbitant hospital bills we should ask ourselves: how much of these construction costs am I paying for?

I would dare say, plenty.



The Happy Hospitalist said...

You hit this nail on the head.

I am not a hospital administrator, but I suspect if you look into the charity programs of most hospitals, you will find that their reported charity, the values that make it to the public media, are all based on full servic charges of the uninsured, which greatly inflates the actual community service being done.

For example. Take Surgery X which is paid a DRG of $10,000 my Medicare. For an uninsured with out a contracted discount, that fee to the patient may be $20,000.

Now the uninsured ain't going to pay it, AND the hospital reports their "charity" as $20,000, not the customary $10,000 receive.

You can see how the numbers game can be skewed to show much more benefit than is actually being provided.

When I discharge a patient from my hospital who doesn't have insurance, I am told that I can't provide them with any medications regardless of their ability to pay, even if they can't afford $ 4 meds at Walmart.

Granted, the hospital is not a free pharmacy, but if you are going to report $20,000 in charity, there may as well be charity.

SeaSpray said...

Interesting post.

It's sad that the people who can usually least afford to pay the hospital/doctor bills actually ends up owing more because they aren't on an insurance plan. The ones I really feel sorry for are the hardworking people that fall in between the cracks because they can't afford insurance but they aren't poor enough to qualify for financial assistance.