Scott MacStravic, PhD
This week, the American Hospital Association sent Congress a letter arguing that hospitals’ ability to keep the promises they have made to patients and communities would be “…seriously challenged by potential federal budget proposals to reduce payments for services to the elderly, poor, and disabled under the Medicare and Medicaid programs.” [Letter from Rick Pollack, Executive VP of AHA dated Jan 30, 2007]
While I was delighted to see the AHA use the term “payment” instead of the common and totally misnamed “reimbursement” in the first paragraph of the letter, it did not strike me as making a strong business case (and besides, it used the term “reimbursement” in the very next paragraph).
It cited the continuing failure of Medicare and Medicaid to pay enough to cover the costs of providing care, at a time when hospitals are challenged to make huge investments in information technology, prepare for emergencies that might include terrorism, modernize facilities, care for increasing numbers of aged, etc. Their role as a safety net for uninsured Americans is also threatened, and arbitrarily cutting payment levels does nothing to address the problems that hospitals face.
Of course, cutting payments does something significant to the problems that the government faces, in Medicare, Medicaid and Social Security alike, which threaten the financial viability of these essential programs. And hospitals have arguably been part of the problem with these programs for decades, and clearly intend to continue to be so. One must wonder what might happen if they could become part of the solution, instead.
The U.S. Preventive Medicine® company has announced to the business world, in an ad that appeared in the Wall Street Journal recently, that it intends to create a Preventive Medicine Network of hospitals and physicians working to prevent the incidence and prevalence of the problems that the AHA wants the federal government to pay more for.
When this company began beta testing of its business model, that model focused on affluent consumers willing and able to pay thousands of dollars for preventive diagnostic testing and health improvement coaching, rather than traditional sickness care alone. This is a narrow market that hundreds of hospitals have already penetrated with “executive health” and “health vacation/medical spa” programs.
But its new plan calls for the addition of two major new markets: 1) a “Prevention Plan” that offers a suite of services in the $300-$500 range to be in the reach of almost all American consumers; and 2) “Group Prevention Services” that will serve both employers and state/local governments with respect to their employees’ health. While this plan is clearly intended to yield a network of profitable centers across the country, it will also be part of the solution, delivering services that should, in both the short and long run, save the federal government money by reducing the sickness for which too many people already seek care. [“U.S. Preventive Medicine, Inc.” Wall Street Transcript Oct 2, 2006 (reprint provided by company)]
Admittedly, the Centers that will provide such services will be serving employees, not Medicare and Medicaid beneficiaries. But to the extent that they enable more employees to remain healthy, they also remain employed, and less likely to need Medicaid assistance. And to the extent that they reduce or delay the incidence and prevalence of chronic diseases, and even “reverse” them to the point where no medical care is needed to control them, only lifestyle management, they will be reducing costs for both Medicare and Medicaid.
The MDVIP organization of some 140 physicians in 16 states is also doing a favor for Medicare, by proactively managing the health of its beneficiaries, who make up a significant portion of the over 100,000 patients served by MDVIP practices. These practices have shown to manage their patients, with significant proactive health efforts, rather than just sickness care, at costs significantly below what traditional practices operate at. (www.mdvip.com)
If, when and because hospitals can make a business case that sufficient payment is needed from Medicare and Medicaid to reduce the incidence and prevalence of disease and injury, and thereby the future costs that the federal government and taxpayers will have to bear, the AHA will have a far stronger position to argue for higher payment. In the meantime, insisting that US hospitals “need the money” is getting pretty old, though they and physicians alike enjoy a reasonably strong lobby.
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