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Wednesday, October 31, 2012

A sort of apology to hospitals, especially little ones struggling to make ends meet

In my previous post I said that an obvious reason why we over-diagnose serious conditions in patients who are not terribly sick is that this results in higher reimbursement to hospitals, "...and when a hospital does well they get remodels with big fish tanks and fountains and flat screen TVs which makes everybody happy."  This gives the impression that hospitals are evil and money grubbing, which is not true. Many small hospitals can barely make ends meet and are absolutely vital to the economic health of the communities they serve. Over-diagnosing and inflating severity are definitely the wrong way to go about making enough money to survive, but it is the strategy they are using now for lack of a better one. 

It is important to change payment structures so doctors and hospitals don't waste their time and energy doing the equivalent of clipping coupons in order to cover costs. Part of the costs that make it hard to survive are the administrative and documentation burdens that hospitals carry in order to be paid by insurance companies for what they do. Another issue is that some of the very sickest and most expensive patients to treat are folks who can pay little or nothing to defray their costs, and receive most of their care through hospitals and emergency departments. All that said, though, hospitals are businesses and do not necessarily have the same motivations as the health care providers who work in them. If payment to hospitals was based on their ability to keep their communities healthy, rather than for individual services rendered, incentives would not favor exaggerating the severity of illnesses.


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