Hospitals’ first duty: to serve patients

The Bangor Daily News opined on June 2 (editorial, “Negotiation Without End”) that attacks on the governor’s Dirigo Health plan “are evidence of how pleased a minority of people are to see the status quo of high cost and limited access continue.”

Convinced that parts of the plan would surely degrade patient care, the Maine Hospital Association indeed spoke up with warnings and suggestions for better approaches. But we’re not candidates for the BDN list of status-quo groupies.

Maine’s nonprofit community hospitals see defects in the status quo every day: uninsured or poorly insured people who must use the emergency room as their main contact for health care, patients with chronic disease that could have benefited from preventive care long ago, growing under-reimbursement of actual costs by government insurance programs, growing piles of paperwork and regulations, increasing difficulty in attracting skilled medical staff. Hospital people have no illusions that the status quo is ideal.

Maine has problems with cost and access for health care. But acknowledging a problem doesn’t mean you should embrace just any idea that purports to solve it. A legislative bill titled An Act to Boost Maine’s Economic Competitiveness and Increase Employment may sound great, but if it rests on cutting the minimum wage to 75 cents an hour, you keep looking for a useful approach.

Health care policy is never finished, the BDN observed, partly because “programs thought to be worthwhile turn out to be stinkers.” It seemed to us that one of the 13 main points in the Dirigo Health plan had definite potential along that line: the proposed “global budget” for total hospital spending.

The global-budget idea had several problems. It took notice of inflation, but ignored rising utilization of hospital services. If the price of gasoline goes up 10 percent and your new job is twice as far from home as your old one, your commuting cost goes up considerably more than 10 percent because you are using your car more. Hospitals are paying more for things they must buy – and are also providing more outpatient and emergency services, and more intensive inpatient services at those higher prices.

The global budget also made no distinctions among discretionary spending, market-driven spending such as the national competition for skilled nurses and technicians, and mandatory spending such as when the federal government requires new privacy protection provisions to be implemented as was recently the case.

The global-budget idea would have also required hospitals and doctors to allocate “resources” – meaning medical staff, programs, equipment and facilities – for the entire state in line with the budget. This would virtually guarantee a bitter fight over a growing gap between hospital costs and permitted spending. We estimated that the plan would require cutting about $750 million from spending in 2005, or the equivalent of the entire budgets of Maine’s 24 smallest hospitals. No rational view of cost savings or efficiencies could permit that kind of cut without denying, delaying or degrading patient care. So we fought the global-budget idea, because not all changes are improvements.

But most other aspects of the Dirigo Health plan have merit, or at least interesting potential, for saving expenses or boosting quality. For example, subsidies to expand insurance availability, increased use of standardized forms and electronic billing, public disclosure of pricing, a tighter Certificate of Need process that would also cover capital spending in nonhospital settings, guidelines on per-discharge costs and operating margins, a Quality Forum for sharing and using best-practice ideas – all of these are worth a try, and Maine hospitals do not object to their being included in the compromise legislation.

No one should imagine that Dirigo Health, in any form, will be a panacea. Fewer than 1 in 5 Maine people are Medicare or Medicaid eligible, yet they account for more than 55 percent of hospital services used. At most hospitals, the programs refuse to pay the full, actual costs of treating their patients. Meanwhile, Maine has boosted Medi-caid eligibility by about 20,000 people since last year while slashing $58 million from the reimbursement budget, so this major challenge to hospitals’ financial stability will get worse.

The BDN’s reference to “intolerably high costs” and “inefficient delivery of care” also needs a dose of reality, at least on the hospital front.

In 2001, per-capita spending on hospital care in Maine was $1,448. The New England average was $1,602, even though Maine people are older, more rural, and more chronically ill than average. Meanwhile, a recent study of the care given to Medicare patients ranked Maine hospitals and other health care providers third best in the country. Hospital spending isn’t out of line and quality of care is high. These are good things to keep in mind when pondering policy experiments.

The compromise version of Dirigo Health just passed by the Legislature does not, however, leave hospitals in status-quo mode. It provides guidance for managing consolidated operating margins (which currently average less than 1 percent) and for controlling the average cost per patient discharge based on type of case. These are likely to be more useful measures than a simple budget cap, and much less likely to affect quality of care for patients or access to care.

Maine hospitals want health care reform, too. But our first duty is to preserve our ability to serve patients as they ought to be served. We appreciate the governor’s willingness to listen to concerns, and acknowledge that a compromise approach is now moving through the Legislature.

Steven Michaud is president of the Maine Hospital Association, the Augusta-based organization that represents 38 non-profit community hospitals in Maine.