Hamstringing Hospitals Won't Cut Costs

July 16, 2009|By Chet Burrell and Carmela Coyle

If there's one thing everyone in the health care debate agrees on, it's that whatever reforms we embrace have to lead to more affordable health care. Businesses, individuals, hospitals and insurers face the same problem: how to moderate ever-higher health care expenses.

Stemming these rising costs was the primary reason given recently when the Maryland Health Services Cost Review Commission set hospital rates at a below-inflation rate of increase for the coming year. Unfortunately, the commission's action to limit the increase in hospitals' charges to 1.49 percent could harm health care delivery in Maryland. Moreover, it is unlikely to stem the rise in health insurance premiums.

Hospitals have been hammered by the recession. The commission's decision further stresses hospitals financially and may drain resources from needed health care programs and community services. Hospitals are concerned that vital care professionals could face layoffs at the very time the state is looking to health care to help lead us out of the recession.

Despite restraint in the rise of hospital rate increases, insurance premiums have consistently risen faster than inflation. Employers have reacted by decreasing coverage and shifting costs to employees. In the long term, these moves, which are driven out of economic necessity, will likely harm the health of the whole community.

So, what is driving costs up? And what can be done about it?

One cause is that we are overusing our health care resources. Needless duplication of tests, diverging incentives for hospitals and physicians, preventable hospital readmissions, a failure to recognize the value of primary care, and a lack of care coordination especially for the chronically ill - all of these things waste resources. In Maryland, we are beginning to attack health care's true cost drivers.

Maryland hospitals are working on a number of fronts to reduce complications and associated costs. The Anne Arundel Medical Center used a multidisciplinary team approach to produce drastic reductions in preventing ventilator-associated pneumonias. At Johns Hopkins Bayview Medical Center, careful coordination has resulted in the elimination of all bloodstream infections for more than one year.

Another approach that is catching on involves coordinating treatment through "patient centered medical homes." A primary care physician is compensated to act as the "quarterback" of a provider team for patients with chronic diseases such as diabetes, asthma or hypertension. Such diseases require constant attention and treatment modifications. Members of the team work together to deliver the full spectrum of care - primary, preventive or acute - to keep the patient healthy. They are rewarded for good performance and good outcomes overall, not just for hospital-based services.

This comprehensive approach zeros in on what these patients really need to stay healthy and seeks to avoid expensive hospitalizations. And since 80 percent of health care dollars are spent treating only 20 percent of all people - usually those with chronic conditions - the savings from better coordination and more personalized care can be substantial.

These types of steps can bring down health care costs. To achieve this, working partnerships between those who provide care and those who pay for it are necessary.

Simply focusing on inpatient reimbursement rates is not reform. But if hospitals and insurers work together to reform the payment system so it rewards quality health care, we can bring down costs and improve health outcomes.

Chet Burrell is CEO of CareFirst BlueCross BlueShield. Carmela Coyle is President and CEO of the Maryland Hospital Association. Her e-mail is ccoyle@mhaonline.org.

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