The Health-care Bubble Might Be About To Burst For Baltimore

July 08, 2009|By JAY HANCOCK

New York thrived during the housing-finance bubble. The health-care bubble is being very good to metro Baltimore.

Hospital wings are rising. Hospitals and doctors are still hiring. Along with government and education, medicine is one of the few things keeping the area's recession from being much worse.

Thanks to some of the highest bills and costliest care in the country, Baltimore's medical industry has accounted for more than half the metro region's job growth in the past five years.

Health-care reform promises to stop all this, leaving Baltimore without an obvious engine to create employment.

"The impact on a place like Baltimore, if we really stop doing procedures that the clinical trials show don't need to be done and should not be done, will be giant on the institutions and on the communities," says Dr. George D. Lundberg, former editor of the Journal of the American Medical Association as well as eMedicine and Medscape, online resources for doctors.

Independent and outspoken, Lundberg is one of the few credible medical professionals talking about the damage runaway health spending is doing to the country.

"I see a huge bubble," he says. "We're paying way more than we need to."

He wants universal care. He just wants it to be affordable for everybody, including taxpayers. True reform, he believes, would shrink medical spending to 60 percent of its current level.

Part of the savings could come from cutting administrative costs, lobbying and lawsuit abuse, he says. But much would be gained by eliminating unnecessary and exorbitant care, categories in which Baltimore seems to specialize.

Johns Hopkins Hospital may be No. 1 in the U.S. News and World Report ratings. Baltimore may be one of the world's top destinations for medical treatment. But Cadillac care comes at a price taxpayers, employers (who cover most private health insurance) and patients can no longer afford.

The average senior citizen treated in metro Baltimore costs Medicare 40 percent more than in Minneapolis/St. Paul, which sets the standard for efficient care, according to the Dartmouth Institute for Health Policy and Clinical Practice.

Maryland has one of the highest concentrations of specialist doctors per resident in the country. It is one of four states where hospital spending on dying patients is more than 30 percent higher than the national average, according to Dartmouth research.

But Baltimoreans and other Marylanders aren't any healthier.

"There is a huge amount of care that is provided that is unnecessary," White House budget chief Peter Orszag told the blogger Ezra Klein a few months ago. "The Dartmouth folks say as much as 30 percent, others say between 15 percent or 10 percent, and fine, that's huge. The question is how we get out of that."

However we get out, it won't be pretty. Even if payers limit care to what's scientifically proven to be effective, as Lundberg suggests, doctors and patients will scream "rationing." (His favorite example of a frequently unnecessary operation: extremely lucrative heart-artery bypass surgeries.)

Even if reform fails in Congress (or delivers a generous plan that maintains spending at present rates), prospects for the medical industry look uncertain. The math is starting to catch up.

"Health care costs have been growing for 30 years at a higher rate than the rate of income growth," says Richard Clinch, a University of Baltimore economist who has done consulting for Hopkins and the University of Maryland Medical Center. "Health care is going to hit a barrier like housing, where you can't pay for it any more. We have to rein this in."

It's true that aging baby boomers are widely seen as a meal ticket for docs and hospitals in coming decades. But with medicine projected to siphon off a fifth of the national income by 2017, the country simply won't be able to afford today's kind of care no matter what the population looks like.

For Baltimore that'll mean slower job growth for nurses and doctors. It'll put pressure on surgeons' incomes and hospital profits. Fabulous new cancer units and their accompanying construction jobs will go scarce or missing.

Hospitals are figuring this out. They're about ready to agree to $150 billion in savings to help pay for a national medical plan, several newspapers reported Tuesday. The deal could be announced today.

"We have too much money in the system already," says Lundberg, who just opened an eponymous think tank dedicated to improving communication on costs between doctors and patients. "To say we're going to throw more money at it - that's ridiculous. We need to squeeze what we need to squeeze and spend the money more wisely."

The country will benefit. Providing basic care for millions of uninsured people is not only the right thing to do; it could temper expenses by keeping people from getting sick.

Employers and employees are screaming about rising costs. Money not spent on excessive care can be invested in better cancer research. Or clean energy or cleaning up loose nukes.

But for regions like Baltimore that have ridden the medical bubble to fame and fortune, health-care reform looks anything but healthy.

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