Are state regulators starving Md. hospitals?

Quality of care: Goal shouldn't be cheap rates if it means decline in caliber of patient treatment.

January 02, 2000

STATE regulators placed Maryland hospitals on a rate-loss diet a few years ago, but the bureaucrats may have overdone it: For some medical centers, it has turned into a starvation diet that could threaten patients' well-being.

Indeed, there is evidence that regulators' cutbacks on hospital rate charges helped precipitate staffing reductions at Shady Grove Adventist Hospital in Rockville, especially nursing shortages, that led to serious medical problems for patients. Shady Grove's accreditation is now threatened.

Seventeen of Maryland's 50 hospitals posted losses in the last quarter of fiscal 1999; by the end of the next fiscal year, the entire state industry could be in the red.

Regulators may gloat about such a feat, because it means hospital rates are falling below the national average. But at what price?

The goal shouldn't be sub-par rates if it threatens to dilute medical care.

Adding to the problem are new numbers prepared for the Maryland Hospital Association by a respected health-care expert. They show that regulators have been using outmoded statistics to justify their reduced rates.

Using updated figures, the study found that Maryland hospitals charged just about the same as the national average last year -- even though regulators claimed state hospitals were 6 percent more costly. If such factors as local inflation and the severity of patient illnesses were taken into account, Maryland hospitals would have been 4 percent cheaper than the national average. The most recent data obtained by regulators confirms this trend.

Under a barrage of criticism, regulators are attempting to "reinvent" themselves. But will the focus be on quality of medical care or squeezing every last excess out of patient rates, regardless of the consequences?

Baltimore's largest hospitals are fearful that regulators will continue to put too much stress on the bottom line. Maryland may not be able to afford Ritz Carlton-style hospitals, but citizens don't want hospitals that operate on a Motel 6 economy level, either.

In medicine, patients want the best at reasonable rates -- not the least expensive.

Maryland is the only state that sets hospital rates. The result is that everyone is assured access. Hospital expenses for those without medical insurance, the poor and charity cases, are factored into the rates of paying patients. So is graduate medical education. It's an "all-payer" system that had worked well until recent years.

A new rate-setting method in which hospitals would be paid a lump sum per case, instead of being charged a rate for each procedure, holds promise. But not if regulators play Scrooge. That could force more downsizing at hospitals, with disastrous results.

Other issues must be addressed, too. Why are regulators using national hospital data that lag behind current trends? There's a huge gap between state hospitals being 6 percent above the national cost average (as regulators claimed) and being just about even (as the new study shows).

Regulators need to reassess their data-gathering methods. They also ought to put aside their green eyeshades long enough to take into account patient care.

When you're sick enough to wind up in a hospital, the last thing you want is the cheapest treatment in town. Quality still counts, especially when it could be a matter of life and death.

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