HC Costs Parsed: What’s Missing?, Part II

Posted on January 17, 2014


See previous post “HC Costs Parsed:  What’s Missing?, Part I”

5.     That leaves the last three cost drivers: “Fragmented and Uncoordinated Care”, “High Administrative Expenses” and “Unhealthy Behaviors”. Patients can only hope Un-fragmented and Coordinated Care is a fringe benefit of healthcare reform. Hospitals will need to solve that internally. And no one can make hospitals improve processes, cut overhead and work more efficiently to reduce administrative costs. Those two will have to happen organically as outcomes of the big moves already mentioned.

6.     “Unhealthy Behaviors” are on our, the public’s, shoulders. Most of us will need an assist from the hospitals to understand healthcare as ‘wellness’ instead of ‘fixing bad things’. As discussed before, this involves a cultural and behavioral shift—eating better, exercising, work/life balance, not smoking. It will take decades.

7.     Notice what’s not on the list: Healthcare Facilities, Tort Reform, Healthcare Fraud, Hospital-Acquired Infections, IT & Data Security. Through its conspicuous absence, the physical infrastructure of care delivery is considered to have an insignificant effect on the cost of healthcare. Once tabbed as the bane of a physician’s existence, fear of being sued, it could be argued, creates a lot of the overly conservative medical behavior that contributes greatly to inflated healthcare costs. Healthcare fraud continues to be a major cost problem.  Lack of infection control and the nasty, hard-to-banish infections acquired while receiving care are big bucks, millions and maybe in the billions of dollars of liability cost. Data, and its security is a relative newcomer. When a hospital system that, not fifteen years ago, had almost no IT expenditure must now pony up $100 million a year for six years to make its dozens of hospitals federally compliant for EHRs, you have a major cost force in place. When data breaches are generating class-action lawsuits, it is not long before it will bear down as a major risk and cost factor. IT has most definitely inflated healthcare costs, and it will inevitably join or replace other cost drivers that will be (hopefully) retired.

8.      Finally, this Cost Commission report should provide more support for the repeal of Certificate of Needs all across the U.S., which is important to accelerate the market and business structural change we all know needs to happen. CONs are commonly justified as the primary means for controlling facility costs, and it is argued healthcare costs as well; however, they have not proven effective.  Just yesterday, the State of Florida voted to repeal a CON moratorium on nursing homes in the state.  I thought the CON process was in place to judge market need?  It’s as if a town builds a dam to hold back the water, and someone else decides arbitrarily to release the dam.  If the need is being overruled by the courts, what’s the point of CONs at all?  CONs are clearly, by definition, obsolete. Please eliminate them, state by state.