Systems of future to stress efficiency

HEALTH CARE INDUSTRIES

March 22, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

In the health systems of the future, doctors will have to provide the precise amount of care needed. If the system sends patients to specialists when a primary care doctor will do, this will cost it money. Cutting corners when a specialist is needed could drag out recovery and cost more in the long run. Thus, the term, "managed care."

"It's a completely different way of thinking. Now the incentive is to provide efficient care -- only that [care] necessary," said Mark V. Stein, director of managed care for Sinai Hospital.

What it means is that specialists will lose patients and see their income reduced. And it means that hospitals might have to close or make themselves over into something else as managed care networks take hold.

A look at the numbers behind the recently announced plan by North Arundel Hospital to become part of a managed health care network helps explain why.

Health maintenance organizations that signed up to use the hospital's New American Health network expect to pay 450 days of hospitalization for every 1,000 members each year. New American quoted a price to the HMOs based on 225 hospital days. It is counting on its doctors to prescribe alternatives to hospital stays that help patients recover at the same pace but at less cost.

These are the kind of reductions in hospitalization that occurred in other parts of the country as managed care moved in. A lower rate of hospitalization automatically reduces HMO costs and allows them to beat competitors' prices (or improve profit margins).

It also means the hospital needs access to thousands more people yearly to keep its beds occupied.

Michael Steinberg, a Baltimore consultant who helped North Arundel set up its program, used an example of a hospital he is working for in New Jersey to illustrate the future facing hospitals.

That hospital has a 70 percent occupancy rate and a 20 percent market share. But only 6 percent of the region is enrolled in managed care programs. To keep its same occupancy rate as managed care reaches 25 percent of all residents, the hospital has to have a 50 percent market share.

"It means that two of every four hospitals have to close," Dr. Steinberg said.

The scene he paints is based on a current landscape. It's before the expected managed care avalanche makes it the dominant form of delivery sometime this decade -- and before Medicare, the federal health insurance program for the elderly and disabled, begins to use managed care programs in a more significant way.

In Maryland, 30 percent of the state's insured population is enrolled in managed care programs. But managed care patients occupy fewer than 12 percent of hospital beds, Dr. Steinberg notes. The reason is that HMOs until now have concentrated on younger and healthier populations that didn't need as much hospitalization. So hospitals can expect a bigger drop in occupancy as managed care companies begin to serve a broader population.

(In California, managed care companies pared hospital use by Medicare enrollees to 900 days per 1,000 people. The national average is 3,500 days.)

As the days patients spend in hospitals shrink, so will hospitals.

But, says Dr. Steinberg, "I don't know of any hospital that thinks it is going to close. I know a lot of hospitals that think their competitors will close."

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