Hospitals increase cost of health care...and pick and choose what they market to whom

The greed of pharmaceutical and insurance companies is the stuff of legend. There can be no justification for the huge costs that the American people have to bear as a result. Their administrative costs and profits alone are unconscionable and drive up the cost of health care so much that it takes a completely self-serving and willfully ignorant Democratic presidential candidate to disingenuously ask “how will we pay for” Medicare for All – and we  have a lot of them. The financial cost is, however, is not the most evil part of what they do. That would be the deaths and disability and bankruptcy that affects so many Americans because the insurance companies deny them care and the pharmaceutical companies make their drugs unaffordable. (This is a mild term for drugs that can cost $30,000-$100,000 a year and more!)

I have written about these issues many times. More recently I have also written about the role that providers (mainly hospitals and “health systems”, but also some physicians, nursing homes, etc.) play in the two-pronged scandal of the US health care system – too expensive and too unavailable to too many. There are some hospitals (I include “health systems” but will use “hospital” to avoid confusion with the “health care system”) that are actually for-profit, but most are officially “non-profit”. This means that they don’t have shareholders – and don’t pay taxes – but they otherwise behave just the same, trying to make as much money as possible. They say that they plow this back into the services that the hospitals provide, but it also includes salaries for C-suite executives that look just as outrageous as those in the “for-profit” sector.

More important, the “improvement” in services does not always – or even usually – create new services that were absent from the community previously, or make them available to more people than previously, say the poor and uninsured. They are usually efforts to attract insured, paying, profitable patients away from other hospitals by building a new, fancier cancer center, or heart center, or orthopedic center. Hardly ever pediatrics (except neonatal intensive care) or mental health – they only want to expand those services that are big profit centers. In this way, it is parallel to the behavior of drug companies; they prefer to minimally modify existing big sellers to get a piece of that market (“me-too” drugs) rather than to develop drugs to meet needs not currently being met.

It is good to see the hospitals being called out by major health system critics. Elisabeth Rosenthal, president of Kaiser Health News, wrote an important article on September 1, 2019 in the New York Times (where was once the health reporter) titled “That Beloved Hospital? It’s Driving Up Health Care Costs”, in which she makes many of the same points. She writes that

Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than gross domestic product, inflation and wage growth. Spending on hospitals represents 44 percent of personal expenses for the privately insured, according to Rand.

A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42 percent from 2007 to 2014 for inpatient care and 25 percent for outpatient care, compared with 18 percent and 6 percent for physicians.

The reason, of course is the political clout that the big hospitals can buy (with, of course, our money!).The Democratic presidential candidates are beholden (with the exception of Sens. Sanders) to both hospital contributions and the role of big hospitals as major employers and economic drivers. “In 2018, PACs associated with the Greater New York Hospital Association, and individuals linked to it, gave $4.5 million to the Democrats’ Senate Majority PAC and $1 million to their House Majority PAC. Its chief lobbyist personally gave nearly a quarter of a million dollars to dozens of campaigns last year.” Could this have anything to do with why “The cost of a hospital stay in the United States averaged $5,220 a day in 2015 — and could be as high as over $17,000, compared with $765 in Australia”? Ya think? Ask you politicians what they are going to do about it…

The media, including Kaiser Health News, has been running stories on hospitals that are aggressively pursuing lawsuits against patients who have been unable to pay their bills. On September 3, 2019, the Times ran a long piece on the poster child for this practice, Carlsbad Medical Center in New Mexico, in “As Patients Struggle With Bills, Hospital Sues Thousands”, but Carlsbad is by far not the only one. The practice is most common in towns with just one hospital, and of course, patients do not know how much they owe – or for what. It doesn’t matter if you are insured: “Ms. Price, 40, a nurse and local 4-H leader, has been sued five times by Carlsbad Medical Center, for bills totaling more than $17,000….Ms. Price said she had never received an itemized bill outlining exactly what she owed money for. The collection agency wanted the balance in full, and she was not able to work out a payment plan until after she was sued.”

This article names other hospitals that sue patients as a core business practice, and mentions over 20,000 suits in Virginia. Turns out that this was in no small part driven by the state-owned University of Virginia hospital in Charlottesville, documented by the Washington Post and MSN in “‘UVA has ruined us’: Health system sues thousands of patients, seizing paychecks and putting liens on homes”. In a quick response, the Governor of Virginia and the University vow to stop suing patients, but this has apparently not affected those already sued: ‘“Fixing the problem “is complicated,” in part because “we are legally obligated as a state agency to collect debts,” he [UVA president Ryan] said. “But we have discretion within those legal constraints to make our system more generous and more humane.”’ It also has not hurt the CEO of the hospital “…Pamela Sutton-Wallace, who will leave in November to join New York-Presbyterian Hospital as a senior vice president”. Maybe she can teach them to sue their patients…

Many of us have sort of emotional attachments to our local hospitals, where we were born, or delivered our babies, or had our life-saving surgery or other treatment; for which we raised money through bake sales and car washes, or maybe volunteered in the gift shop. But these are not the warm fuzzy hospitals you remember. Rosenthal acknowledges that many rural hospitals are in financial trouble – and they are – but supporting the fantastic (“non-”) profit of these major hospitals is not going to change that. As in every other sector of society, we have two classes of service. One is to those in major metropolitan areas with money or good insurance, with conditions that are highly-profitably reimbursed, like cancer. Preferably all of the above. There is no limit to what will be invested in them. Then there are those without money, or good insurance, who live in rural areas, or have problems that are not well reimbursed, like mental health or substance use. They will not get investment. Simple as that.

Major hospitals are big businesses and act like it. You are a customer – but, compared to other industries in which you are a customer, a particularly uninformed one. Need a car? A refrigerator? Financial services? Dental care in Mexico (had to get that one in)? You can find out what it will cost and compare prices. Hospital care? In the US? You gotta be kidding.

The answer? Improved an expanded Medicare for All, a single-payer system in which, as in Canada, hospitals get global budgets, and separate capital budgets so that they cannot use the money (profit) they earn on your care to build spas to attract high-paying patients from competitors. Where everyone gets the care they need, and no one gets excessive care. Possible? Too expensive? Ask the Canadians. Or Australians, where the average hospital bill is less than $800. Or British, or French, or Swedish, or Danish, or Dutch, or German, or Taiwanese….

Maternal mortality in the US and UK: Why do we tolerate paying so much more for so much worse outcomes?

Last year, ProPublica, in association with NPR, published Why Giving Birth Is Safer in Britain Than in the U.S. In typical journalistic style, it starts by grabbing your attention with a case report of a woman in England who almost died of post-partum hemorrhage, but did not. The lesson is presumably that she did not because the physicians, midwives, and others attending her followed a rigorous set of established protocols for addressing post-partum hemorrhage that are implemented nationally in the UK.

Of course, there is a possibility that this individual woman could have died, or had to undergo more invasive surgical procedures further down the protocol’s algorithm, but the real point is that, overall, the system is working. The evidence is in that the maternal mortality rate (deaths/100,000 women delivering) is 8.9 in Britain, while in the US the rate in 2015 was 25.1, three times that of the UK! What makes this more dramatic is that the disparity has developed only since 1990; until then the maternal mortality rates in the US and UK had been declining in parallel since the 1950s.

The article cites several reasons for this difference. One, a very important one, is that the UK collects data on maternal mortality nationally and develops guidelines based upon this data which are implemented nationally. In contrast, the US collects data at best by state, or even by hospital, and

There is no federal-level scrutiny of maternal deaths, and only 26 states have an established committee (of varying methodology and rigor) to review them. Nor do all U.S. hospitals routinely examine whether a death could have been avoided. Procedures for treating complications such as preeclampsia, and for responding to emergencies such as hemorrhage, vary from one doctor, hospital and state to the next.

This is true despite the fact that the methods used by the British to collect and analyze this data were developed in the US. While there has been a well-documented 30-year effort to improve quality and to reduce preventable deaths (a category into which most maternal mortality falls) in the US, led by such organizations as the Institute for Healthcare Improvement (IHI) and embraced by such other organizations as the American Hospital Association (AHA), National Center for Quality Assurance (NCQA), the Joint Commission for the Accreditation of Healthcare Organizations (TJC), the National Academy of Medicine, and on and on, no compulsory national approach to this problem has developed. This reflects a common, and often knee-jerk, opposition to centralized approaches to almost everything, even when they have been determined to have an important effect on reducing death. It is actually parallel to efforts within hospitals to standardize care, to require, for example, all surgeries to go through a series of prescribed steps (“timeouts”) before operating, or limiting the number of different devices implanted to those needed by different types of patients rather than by the preference of the individual surgeon (for an interesting discussion, see A. Gawande, “Big Med”, New Yorker, August 13, 2012). That is, it is effective where it has been done, but it is not mandated to be done everywhere and comprehensive national data is not even collected.

Another big part of the successful UK approach to the reduction of maternal mortality has been collecting detail on what happened and why; this goes beyond “there was a death”, or “there was a death from hemorrhage”, or “there was a death from sepsis”, to identifying why it happened, particularly if the reason was something that is relatively easily addressed. Marian Knight, head of MBRRACE-UK, the group that collects the data and makes the guidelines, says

It’s all very well to know a woman died of sepsis, but to know that she died of sepsis because nobody measured her temperature, as they had no thermometers on the postnatal ward, that’s where the instruction Put a thermometer on your postnatal ward might make a difference. It’s not just the what, it’s the why.

Can you believe that there might be post-partum units where there is no thermometer? Apparently it has happened. And having a rule that it must be present is a way of preventing it from happening again.

There are at least three other important dimensions. One is that, as the report states, “These U.S. deaths are not spread equally. Women who are poor, African American or live in a rural area are more likely to die during and after pregnancy.”  This is not a big surprise.  Poor women, minority women, rural women, and uninsured women do much worse, and are much more likely to die from complications of delivery. It is the familiar song in the US, as in so many areas, of health and of every aspect of society. Is it not true in Britain? The article goes on to say

In the U.K., while inequalities persist when it comes to serious complications, according to 2012-2014 data, there is no statistically significant difference in mortality rates between women in the highest and lowest socioeconomic groups. All British women have equal access to public medical services, including free care and prescriptions from pregnancy through the postpartum period.

This also has two components; the greater equity of the quality of healthcare delivered to all segments of the population, a result of having a national health care system, and less disparity in the “social determinants of health”, the actual quality of the lives of people (women, in this case) before they access care. Especially for rural women, some of the problem the lack of an adequate number of health professionals. Over 20 years ago, family medicine residencies in Texas were surveyed and only a small percent of residents were interested in providing rural obstetric care, but no OB/Gyn residents were! This has not improved; while a recent study published by Tong, et al., in Family Medicine (Characteristics of Graduating Family Medicine Residents Who Intend to Practice Maternity Care) found that 22% of FM residents planned to deliver babies, they cite his 2012 study that showed that only 9.1% of FM residency graduates were delivering babies 1-10 years out into practice despite an intention to do so of 24%, comparable to the current study.

Another dimension is that the difference in maternal mortality reflects a greater focus on the health – and life -- of the pregnant woman in Britain, while in the US the focus is more on the health of the fetus and the newborn. This goes far beyond the issue of abortion, although the focus on children rather than women is one that is also characteristic of the anti-choice movement in the US. It is so deeply ingrained in our culture that even many health professionals (including midwives, doctors, and nurses) who see themselves as “pro-choice” and would never want to see a maternal mortality, are still more focused on the fetus and baby. It results in a practice, if not a belief, that considers the woman but a vehicle for producing a child.

Finally, there is cost, ironically but again unsurprisingly much higher in the US. Much higher. The total cost for a normal vaginal delivery in the US is about $30,000, and about $50,000 for a Caesarean section. In Britain, the cost for a normal vaginal delivery or planned Caesarean is about $2500, or less than 1/10^th the cost in the US, perhaps rising to $3400 for complicated cases (such as the one that leads off the article). Thus, the US charges far more, but has much worse outcomes for maternal mortality (as for many other conditions). This is not a side note; it is not just an interesting contradiction that our care costs more but has worse outcomes. And it is not by any means limited to pregnancy care or maternal mortality, but is present in our healthcare system at almost all levels and for most conditions. What ties these two components, cost and quality, tightly and inversely together, is that our “healthcare system” is only secondarily about delivering quality healthcare, and primarily about being a profit-making business.

So, that is the bottom line. The US has three times the maternal mortality rate of the UK despite charging ten times as much for delivery. The reasons are the absence of a national strategy to identify and remedy the causes of maternal mortality and the lack of a national healthcare system to provide the access necessary for women at risk. It causes the suffering and death to disproportionately affect those women who are already at greatest risk: the poor, minority, rural, and uninsured. The root cause is that our healthcare system is composed of poorly interconnected components, most of which are run as businesses to make money.

It is inequitable, and it is irrational from a health perspective if not from a business one. It causes unnecessary death and excessive cost, and seems to not be improving. It is not acceptable. We need to change it.

Quality health outcomes depend upon the Social Determinants of Health

On the heels of the publication by the Center for Medicare and Medicaid Services (CMS) of how much money Medicare paid to individual physicians (discussed on this blog in Medicare payments to doctors: the big issue is the underpayment for primary care, April 9, 2014), we have revelations of inequity in Federal payments to health providers. A panel of the National Quality Forum (NQF), convened by the Administration to look at this issue, has determined  that payments for “quality of care” to hospitals under the Affordable Care Act (ACA) tend to reward those hospitals caring for higher-income patients and penalize those who care for the poor (Robert Pear, “Health law’s pay policy is skewed, panel finds”, New York Times, April 27, 2014). This cannot be the way we want to go, and thankfully that is the conclusion reached by the panel. It is, however, the NQF that developed these 600 or so quality indicators, and has not recommended adjusting them for the socioeconomic status of the patients that a hospital cares for (although it does adjust for severity of illness).

What is happening is that the measures of quality of care are largely not measures of what is done for patients in the hospital, but how they do after – are they readmitted shortly after discharge, are the diseases for which they are being cared for under better control or not, do they get follow-up care. The fact is that for a variety of reasons including money, education, transportation, and competing demands, poor people do not do as well as better-off people, even controlling for the quality of care that they receive when they are hospitalized. A number of panel members comment on this in the Times article, including NQF president Christine Cassel, who says “Factors far outside the control of a doctor or hospital — patients’ income, housing, education, even race — can significantly affect patient health, health care and providers’ performance scores,” and panel member Steven H. Lipstein, CEO of BJC HealthCare in St. Louis who adds “The administration’s current policy on adjustments for socioeconomic status are quite inadvertently exacerbating disparities in access to medical care for poor people who live in isolated neighborhoods. I’m sure that’s not what President Obama intended with the Affordable Care Act.”

These comments are true, but the thrust of the NQF’s comments was the unfairness to the hospitals. This is important as far as it goes – it is outrageous to pay extra money for “quality of care” to hospitals that care for the privileged and penalize those that care for the underserved. Many of the members of the panel and other commenters quoted by Mr. Pear focus on academic teaching hospitals, which indeed care for a disproportionate share of poor people; however, public hospitals (in those areas where they exist) are even more affected. But what is more important is how this issue illustrates the power of what are called the “social determinants of health”, the situation that people live in before they access medical care, and after they are discharged, have on health outcomes.

Health advocate and policy expert Kip Sullivan is more pointed in his comments on Don McCanne’s “Quote of the Day” for April 28, 2014. “The notion that doctors and hospitals are screwing up and will behave if they are subjected to punishment and reward by third parties is not new. The Code of Hammurabi (1750 BC) subjected Mesopotamian doctors to a combination of reward (more shekels) and punishment (cutting off of doctors' hands)…But even Hammurabi didn’t recommend punishing the patients.”  If hospitals that care for poor people are effectively financially penalized for doing so, they will (at best) be further financially challenged in providing that care, and at worst will do their best to not care for the poor to the extent that they can.

Why would the NQF and the Department of Health and Human Services (HHS) take such a position, one that seems both unfair and even mean? One might be tempted to suggest that rewarding the “haves” and punishing the “have nots” is what is usually done by government policy, but we would hope that, given its rhetoric on health care – and the creation of the ACA in the first place – the Obama administration would not be guilty of such intent. We get some better idea from Kate Goodrich, the director of quality measurement programs at the federal Centers for Medicare and Medicaid Services, who is quoted in Mr. Pear’s article as saying “We do not want to hold hospitals to different standards of care simply because they treat a large number of low-socioeconomic-status patients. Our position has always been not to risk-adjust for socioeconomic status within our measures because of concern about masking disparities, and potentially rewarding providers who provide a lower level of care for minorities or poor patients.”

Now, this sounds almost noble, like a values-based response to critics such as those on the NQF’s panel. However, the clear and obvious flaw in such logic is that hospitals have the power to change the lives of these patients in such a way as to decrease their risk for poor outcomes to be equal to, or better, than, those of higher socioeconomic status. They don’t, and to the extent that they could do more work in the community to help this situation, it would cost more money, so it is absurd that they be financially penalized. Dollars spent by government on health care should first and foremost be required to be spent on health, not on making money for providers (doctors or hospitals) who can by virtue of their location (and possibly other strategies) avoid taking care of the neediest. Hospitals should be judged and reimbursed on the quality of care that they deliver, equitably and without prejudice with regard to socioeconomic status, but cannot reasonably be judged on outcomes which depend on factors far outside the control of those hospitals.

The real issue is that people who are poor have a lot more to contend with than the services delivered as health care. It is not uncommon for our hospital to be treating a person with a bone infection made worse by their diabetes who needs 6 weeks of IV antibiotics. This can be delivered by a home health care agency, and most insurance will pay for it. But it becomes a problem if the person does not have insurance. And is even more complicated when they do not have a home. These people stay in the hospital, at exorbitant cost, for the whole duration of treatment. But would our quality measures be better if we only cared for those with homes and insurance? Would the hospital make more? Of course, as Mr. Sullivan points out, while the hospitals lose financially, ultimately it is the patients who suffer.

The social determinants of health are well-portrayed in the “cliff analogy” developed by Dr. Camara Jones and her colleagues,[1]and discussed in my blog of September 12, 2010, “Social Determinants, Personal Responsibility, and Health System Outcomes”. The care given by hospitals occurs at the bottom of the cliff, after people have fallen, but their risk, both before arriving at the hospital and in returning home, is that they are living so close to the cliff face; their housing is poor, their neighborhoods are dangerous and polluted, their schools do not educate, and food is often scarce and not nutritious.  In their study comparing health costs in the US and Europe, Elizabeth Bradley and colleagues discovered that while the US spends far more on “health care”, if you add in basic social service spending, the difference decreases, but that the US spends most of its combined health-and-social-service spending on medical care.[2](Discussed in a New York Timesop-ed, “To fix health care, help the poor” by Bradley and Lauren Taylor, and in my blog “To improve health the US must spend more on social services”, November 18, 2011.)

It is understandable that, given the political climate in Washington and state capitals and the flak that they took for ACA, the Obama administration does not want to put major effort into addressing the social determinants of health by developing programs to meet the core needs of poor people in our country, to prevent them from getting sick, to give them access to meaningful post-hospital care, to have health workers in communities, punish polluters, decrease crime, and limit health risks. Understandable, but not OK. And in the meantime, on this narrower issue, it obviously requires adjusting for socioeconomic risks for hospitals caring for the poor when their quality incentive payments are calculated.

But sometime soon we are going to have to address the core problems.

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[1] Jones CP, Jones CY, Perry GS, “Addressing the social determinants of children’s health: a cliff analogy”, Journal of Health Care for the Poor and Underserved, 2009Nov;20(4):supplement pp 1-12. DOI: 10.1353/hpu.0.0228. Slides available on line at http://www.csg.org/knowledgecenter/docs/health/CamaraJones.pdf.

[2] Bradley EH, Elkins BR, Herrin J, Elbel B.,Health and social services expenditures: associations with health outcomes, BMJ Qual Saf. 2011 Oct;20(10):826-31. Epub 2011 Mar 29