Competition or Regulation??
Here is an OP-ED from Modern Healthcare that is worth reading in its entirety. It can be found at the following address: Modern Healthcare Online
Hospitals’ predicament
Will better patient care come from competition or regulation?
By: David Burda, Editor
Story posted: December 11, 2006 - 9:14 am EDT
If you’re on the fence about health planning, two major stories that broke over the past two weeks should shove you into one camp or the other.
On Nov. 28, a legislatively established commission in New York released its report on overhauling the state’s healthcare system. As New York Bureau Chief Cinda Becker reported in our Dec. 4 issue (p. 6), the commission recommended reducing hospital beds in the state by 7%, or about 4,200 beds (including closing nine hospitals) and reducing nursing home beds by 3%, or about 3,000 beds.
The commission’s recommendations are binding unless the state Legislature acts to rescind them in their entirety. The process represents the ultimate form of regulatory health planning. The state of New York will decide which hospitals and nursing homes stay open, which will close and which will be forced to reduce their capacity.
Two days later, on Nov. 30, University General Hospital Systems, a privately owned, for-profit hospital company, announced plans to build 10 physician-owned, acute-care hospitals in select markets across the U.S. in a $1 billion deal with an outfit called Alliance Development Group out of Charlotte, N.C. The prospect of a national chain of physician-owned, general acute-care hospitals is the subject of this issue’s cover story by reporter Jessica Zigmond (p. 6).
The University General announcement represents the ultimate form of competition in healthcare. Unshackled from the recent federal moratorium on physician-owned specialty hospitals and targeting states with little or no health planning laws on the books, University General poses a threat to other hospitals in those markets. That could result in hospital closures and bed reductions—but from competition, not regulation.
Given those polar-opposite scenarios, would you rather be a hospital administrator in New York right now or a hospital administrator in a city where University General intends to open up one of its 10 physician-owned facilities? It’s a real test of your belief in regulation or competition as the option for improving care, controlling costs and expanding access.
Perhaps it depends on your personal situation. If you’re running a hospital in New York that’s on the commission’s hit list, Dallas, Denver or Phoenix don’t sound so bad right now. You’d have a chance to fight for your hospital’s survival and your job.
If you’re running a hospital in New York that was spared only to see a former competitor go down, life is good. But if you’re running a weak sister in a city where University General is holding a ribbon-cutting ceremony with your smiling chief of staff, New York in January may seem like heaven.
As firm believers in the benefits of healthcare competition for patients, you know where Modern Healthcare comes down on this issue. The market should decide which hospitals survive, which ones downsize and which ones close.
Those fates should be determined by value: access to the best possible care for the lowest possible price. And the only way to get there is through competition, not regulation. That’s why we consistently advocated abolishing state certificate-of-need laws.
Millions of dollars will be spent on lawyers, consultants and appeals by hospitals in New York fighting the commission’s recommendations before the first bed is put out of service. That’s millions of dollars that could be plowed back into those hospitals to improve their services and make them more competitive.
And in markets where University General is coming to town, existing hospitals will spend millions to gird themselves for the vigorous competition. New buildings, the latest medical technologies, better information systems, more qualified doctors, more nurses and expanded services. The result will be greater access to better care for patients at competitive prices. No form of healthcare regulation can do that.
Hospitals’ predicament
Will better patient care come from competition or regulation?
By: David Burda, Editor
Story posted: December 11, 2006 - 9:14 am EDT
If you’re on the fence about health planning, two major stories that broke over the past two weeks should shove you into one camp or the other.
On Nov. 28, a legislatively established commission in New York released its report on overhauling the state’s healthcare system. As New York Bureau Chief Cinda Becker reported in our Dec. 4 issue (p. 6), the commission recommended reducing hospital beds in the state by 7%, or about 4,200 beds (including closing nine hospitals) and reducing nursing home beds by 3%, or about 3,000 beds.
The commission’s recommendations are binding unless the state Legislature acts to rescind them in their entirety. The process represents the ultimate form of regulatory health planning. The state of New York will decide which hospitals and nursing homes stay open, which will close and which will be forced to reduce their capacity.
Two days later, on Nov. 30, University General Hospital Systems, a privately owned, for-profit hospital company, announced plans to build 10 physician-owned, acute-care hospitals in select markets across the U.S. in a $1 billion deal with an outfit called Alliance Development Group out of Charlotte, N.C. The prospect of a national chain of physician-owned, general acute-care hospitals is the subject of this issue’s cover story by reporter Jessica Zigmond (p. 6).
The University General announcement represents the ultimate form of competition in healthcare. Unshackled from the recent federal moratorium on physician-owned specialty hospitals and targeting states with little or no health planning laws on the books, University General poses a threat to other hospitals in those markets. That could result in hospital closures and bed reductions—but from competition, not regulation.
Given those polar-opposite scenarios, would you rather be a hospital administrator in New York right now or a hospital administrator in a city where University General intends to open up one of its 10 physician-owned facilities? It’s a real test of your belief in regulation or competition as the option for improving care, controlling costs and expanding access.
Perhaps it depends on your personal situation. If you’re running a hospital in New York that’s on the commission’s hit list, Dallas, Denver or Phoenix don’t sound so bad right now. You’d have a chance to fight for your hospital’s survival and your job.
If you’re running a hospital in New York that was spared only to see a former competitor go down, life is good. But if you’re running a weak sister in a city where University General is holding a ribbon-cutting ceremony with your smiling chief of staff, New York in January may seem like heaven.
As firm believers in the benefits of healthcare competition for patients, you know where Modern Healthcare comes down on this issue. The market should decide which hospitals survive, which ones downsize and which ones close.
Those fates should be determined by value: access to the best possible care for the lowest possible price. And the only way to get there is through competition, not regulation. That’s why we consistently advocated abolishing state certificate-of-need laws.
Millions of dollars will be spent on lawyers, consultants and appeals by hospitals in New York fighting the commission’s recommendations before the first bed is put out of service. That’s millions of dollars that could be plowed back into those hospitals to improve their services and make them more competitive.
And in markets where University General is coming to town, existing hospitals will spend millions to gird themselves for the vigorous competition. New buildings, the latest medical technologies, better information systems, more qualified doctors, more nurses and expanded services. The result will be greater access to better care for patients at competitive prices. No form of healthcare regulation can do that.
posted by Anonymous at 5:51 AM
9 Comments:
Unfortunately, the scenarios presented cannot be resolved by themselves. Overall health policy must be changed before one can say that either scenario is the better answer.
Regulation and policy are not the same thing. What I am thinking about is the issue of access to hospitals and the ability to pay.
Iamhoosier is right. Without quantifying minimum standards for access and affordability, it's difficult to determine which system or combination of systems more effectively accomplishes them.
My guess is that the insurance and pharmaceutical companies would be pretty happy to watch the states and the doctors expend their resources in public battle while they quietly go about the business of fleecing both of them and, ultimately, the patients.
What could be accomplished by combining those resources against what most consider to be common enemies? Either system could be more affordable as a result.
bluegill what is that mish-mash of words supposed to mean?
Combining those resources against common enemies? How would doctors combine their resources with the state -- and to what end would doctors and the state fight insurance and pharmaceutical companies?
The first step in cooperation could be the states' sharing of real insurance and legal data that, when closely examined, shows that the malpractice "crisis" the insurance industry uses to justify high premiums is largely a myth.
The second step would be for doctors to stop financially supporting the medical associations and politicians who participate as part of that propaganda machine. If doctors seriously want to protect their and their patients' interests, they should lobby for insurance reform and a much better system of policing those few physicians who are repeatedly found guilty of legitimate malpractice.
Repeat the process for the pharmaceutical industry and their misinformation campaigns concerning the cost of private research and development and its inflated importance in improving healthcare.
The states need to challenge federal laws and funding mechanisms that favor pharmaceutical profiteering and the doctors need to support those challenges, including informing patients to the extent possible about the business practices that affect drug prices.
The public simply can't make informed decisions about a logistically and morally complex topic like healthcare without reliable, factual information. The states and the doctors can help the public hold the corporations accountable for their factually incorrect and sometimes patently dishonest contributions to the debate. The media has a role to play, too.
Sounds good, but realistically very unlikely to occur. For most primary care physicians already putting in 80 plus hours a week, when are they going to do these things.
Leaving your office costs money both in revenue and expenses.
Medical organizations have been of little help to make major changes. They just do not have the money to fight these large entities.
Most physicians want to practice medicine, not politics.
Things will not change until the idividual consumer gets hit hard enough financially. They have been out of the payment loop far too long and big industries created this problem by paying for health insurance.
I think to some extent we are mostly on the same page. Health care reform is extremely complicated and it is impossible just to look at one solution.
HB, I agree with your statement about the consumer being out of the loop for far too long. I think this is beginning to change.
One possible discrepancy that I noticed was the contention that most primary care physicians work 80 plus hours per week. Perhaps you might want to look at your 12-7 posting where you posted an hours worked survey to make your point. It shows primary care physicians working 50 hour per week.
"Most physicians want to practice medicine, not politics."
That is why I go to one of them and not to you.
"Things will not change until the idividual consumer gets hit hard enough financially."
I pay over $400 per month for my family's healthcare insurance, my employer pays an additional $192. This premium has consistently gone up each year, in spite of my co-pays and deductibles also rising. I don't think I'm alone. The consumer is being hit hard financially.
"Most physicians want to practice medicine, not politics."
That is why I go to one of them and not to you.
1/03/2007 12:18:00 PM
anonymous 12:18,
It is a shame you feel that way, you are missing out on a really great Doc. Dr. Dan is one of the best out there.
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