Consumer-Driven Health Disasters

One of the buzzwords of “market-oriented” health reformers is the importance of “consumer-directed health care (CDHC):” assuring that patients get more choice in exchange for taking on more financial responsibility. As Regina Jefferson noted in a prescient article, some aspects of CDHC have a lot to offer the “healthy, wealthy, and wise.” But there are some darker trends.

Consider, for instance, the rise of specialty hospitals–those that only focus on a particular type of medical problem (usually the most lucrative ones to treat, like cardiac or orthopedic surgery). Such hospitals are often physician-owned, and offer enormous financial rewards: all the profit from high-margin operations, and none of the common general hospital obligations to subsidize emergency rooms, physician training, or care for the uninsured. Specialization also allows the hospital to build up an expertise on particular problems, which is great for patients…until complications ensue.

Then, as this NYT article reports, the specialty hospital may well have to call 911 to save its patients. The physician-owned hospital, long “assailed for cherry-picking the most profitable procedures from the nation’s . . . full-service hospitals,” is thrown on their mercy in cases like that.

Federal regulation of specialty hospitals has been all over the map, as a moratorium on Medicare funding for them expired in 2005. But as Republican Senator Charles Grassley notes, “The problem with physician-owned specialty hospitals is that decision-making is more likely to be driven by financial interest rather than patient interest.” Now it appears that at least their ER responsibilities are getting renewed scrutiny:

As the number of doctor-owned surgical hospitals grows, federal and state officials now acknowledge that the government rules may be too vague about the emergency abilities a hospital must have in place. Regulators are particularly concerned about the very small hospitals that focus on only a few kinds of surgery but perform operations that frequently require an overnight stay. While Medicare’s rules currently say a hospital must “meet the emergency needs of patients in accordance with acceptable standards of practice,” the details are left largely to the hospital’s discretion. Federal and state officials say they are now reviewing the guidelines to toughen the rules and make them more specific.

My question is: what about these hospital’s responsibility to the community? Do they only owe a duty to patients already admitted to them for procedures? If that’s the case, keep your fingers crossed that you don’t have a medical emergency in an area where speciatly hospitals have eroded the profit margins of the general hospitals and led to ER closures. You could be diverted to a facility far away.

This dilemma reminds me of Michelle Melden’s rundown of the three key myths of CDHC: “1) the myth of discretionary health care spending; 2) the myth of discretionary income for health care spending; and 3) the myth of consumer power to negotiate over and make an impact on the costs of health care.” For a few isolated expenditures, these ideas may well lead to a reduction of costs. But as Melden points out, for the great majority of costs incurred by the chronically ill, they are utterly unrealistic.

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