Here’s the next episode in what I’m starting to call “The Big Ugly” – a wave of suffering that will happen as the medical industry contracts, and everyone tries to find ways to maintain their income. Unfortunately when an industry shrinks, everyone can’t maintain the same income. As anyone knows who’s seen an industry die (like mine, typesetting; or steel in America, or what Detroit went through), it’s painful. Good people get hurt, and organizations fight for survival.
Medicine’s certainly not going to die – we need it – but the Institute of Medicine says (see links below) we have massive overspending, and when the overspending shrinks, that too will hurt.
Today’s Boston Globe has the newest item: Hospital charges bring a backlash:
Patients, angered by surprise surcharges that hospitals tack on bills for doctor visits, are increasingly challenging these fees — sometimes even refusing to pay.
Hospitals say the charges cover their overhead, but the fees are sometimes added to the bill even when patients are treated in offices miles away from the medical centers. …
The Globe published a story in January about a patient charged $1,525 in operating room and facility fees for a minor skin procedure. Yeah, the doctor charged $354 for her services, and the hospital (Lahey Clinic) added $1525 of overhead. Another patient is quoted as sounding like (amazingly) an empowered consumer:
“I am willing to spend my money for my doctor — I am getting expert care,’’ said the New Hampshire resident. “I am not willing to pay $500 to sit in a waiting room.’’
Watch for more stories of overhead charges, and more, as organizations gasp for air, and ask consumers to bear the burden. See other stories in the links below, like the chain that put its E.R. docs on quota.
What to do:
- If you’re in the industry:
- Watch for surprise charges being shuttled over to you; you may need to push back.
- Think ahead: examine your business. If your charges are higher than norm, that’s part of what the IOM was talking about, and the signs are clear: you’ll need to find a way to change. (If you do it faster than your competition, you’ll benefit. If they do it faster, they’ll benefit. Welcome to competition!)
- Or if your docs are ordering scans etc (or anything else) that really isn’t needed, that’s part of it too. As in other contracting industries, managers need to retool their organizations for the new world that’s coming. (See the “collapse” link at bottom of this post.)
- If you’re in health policy, please consider rules where necessary – as you know, the purpose of reducing costs is to eliminate unnecessary spending, not to hurt everyone. I don’t want regulations where none are needed, but when good people (including patients) get a load shifted onto them, simply because someone else wants to maintain their income, rules may be needed, in fairness.
- If you’re a patient or employer – the ones who pay for all this – watch out.
(Insurance companies don’t need any warnings – as far as I can tell, they know exactly what’s happening with the money. :-) Some are working to fix the industry, and some are saying “Oh darn, spending’s up – gosh, that means our x% cut is up!” Not a problem, to some of them.)
Be informed, be aware, be engaged.
Mind you: In any industry this is painful. Good people will get hurt. But as with contraction in any other industry, everyone involved needs to be aware. Let’s do what we can to care about each other and take care of each other, but let’s not harm others unfairly in the process.
Earlier posts in this series:
- Best Care at Lower Cost: As the crunch hits, will the best survive?
- Includes the December “60 Minutes” with E.R. docs who were put on quota, to admit 20% of patients regardless of need, even though 25% of patients admitted to hospitals experience some form of harm
- Also links to the IOM’s report that says America spends $750 billion more than needed
- Includes a vivid description of how big that is – it’s more than if Intel, Microsoft, Apple, GM, IBM, Ford, Chrysler and Dell all went out of business.
- Reprise: The healthcare waste pit is BIGGER than the fiscal cliff, with this: “Some providers are working really hard to improve effectiveness, and some insurance companies are too. Some aren’t. A lot of people’s income depends on keeping things the way they are. During the change, how will we ensure that families and the best workers in the system are protected while inefficiencies are pruned?”
- Collapse couldn’t happen in law, and it can’t happen in medicine. Right?
- Includes an important comment from Paul Sonnier, linking to a Clay Christensen post: “Disruptive Innovations Create Jobs, Efficiency Innovations Destroy Them”
These are the so-called facility fees, which are coming into play as more docs become hospital employees. I think the link below does a better job of explaining it than our friend Liz Kowalcyzk:
http://www.usnews.com/opinion/articles/2013/01/28/hospital-facility-fees-raise-out-of-pocket-costs-for-medicare-patients
About facility fees…
Imagine you are a hospital with a physical therapy department that is open 10 hours a day, sees not just ambulatory patients but truly very ill patients, some in specialty units and many in their rooms rather than in the department. You have to staff for weekends and holidays. Part of what supports this PT for very sick patients are the ambulatory patients referred by local clinicians.
Now imagine that someone opens a Monday-Friday, no evenings, weekends or holidays physical therapy center down the block from your hospital which sees only the least sick and least intensive patients. But, thanks to CPT codes, they get paid the same for their services that you do for your much more robust and higher overhead PT department.
So, you go to your local legislature and get permission to charge a ‘facility fee’ to cover the cost of maintaining a higher intensity PT system in a high overhead facility. So far, so good.
But now, some bean counter realizes that the law was carelessly written. Any medical service provided by the parent organization can charge a facility fee. It isn;t long before it seems wise to do two things: decentralize and move less sick outpatients to less expensive facilities, and acquire outpatient practices.
Voila. The law of unintended consequences.
When our practice was acquired y the local medical center, patients were suddenly charged a facility fee that was not always covered by insurance (if they had no insurance or a high deductible). The medical center liked to explain that it covered the enhanced service they received because our practice was now a part of a big and complex system. Patients saw through that, pointing out that the big and complex medical center provided no increased service at the point of primary care – and often seemed to impair quality and convenience.
It’s about damn time this issue got some attention and legislative redress.