Why You Can't Afford to Be Sick

...Its cost is expected to be more than four times as high this year and twenty times as much by 1975...

...These and other items in a seemingly endless round of cost increases add up to the most explosive issue in the health care field and are triggering a searching examination of the prevailing system and mounting support for radical reform in both the financing and the delivery of medical services...

...A distinguishing characteristic of hospitals is their insulation from the competitive discipline of the marketplace and consequent lack of incentive to keep down costs as much as possible...

...While many hospital procedures do not lend themselves to mechanization, there are others where efficiency can be considerably improved...

...Even more serious is the cost in lives resulting from the lack of opportunities for essential surgical practice and the failure to pool skills as well as equipment...

...The biggest gaps are those of out-of-hospital drugs and dental care, which are not covered at all...

...In 1969 the figure exceeded $60 billion, or 6.8 per cent of the gross national product...

...The experience of the last few years has amply demonstrated that superimposing new programs on the existing creaking structure merely serves to feed this inflation...

...But while the program has nowhere near fulfilled its promise of adequate health care services for the poor, it already has helped push millions of middle-class Americans toward the brink of medical indigence...

...The rest is accounted for by increases in medical and hospital prices, which in the last few years have been rising three times faster than the overall cost of living...

...The Medicaid program has run into so many difficulties that it has had to be cut back, gutting in some instances what were grossly inadequate provisions to start with, and is in danger of collapse...

...They reimburse physicians on the basis of "reasonable charges,'' which again essentially means whatever each doctor can square with prevailing community rates set by the medical profession itself, the nature of the service and the self-assigned value of the doctor's time...

...According to a more recent study, one surgeon who did open-heart surgery at least once a week had a death rate of below five per cent...

...Medicaid is designed to help people on public assistance and those who are not so poor as to be on the welfare rolls but who cannot afford to pay for medical care...

...Organized medicine's attitude toward prepaid group practice has gradually changed over the years from outright hostility and active harassment to a posture of cool neutrality...

...But there are far too many small hospitals—relics of the days when transportation facilities were much poorer than they now are —which not only cannot afford the specialized competence and tools required for up-to-date care but are grossly uneconomical...

...Since empty beds mean a loss of income, hospital administrators are inevitably prone to seek to maintain the highest possible occupancy...

...Both programs, and particularly Medicaid, have produced widespread charges of fee-gouging by some physicians, and both have put an added strain on scarce facilities and personnel...

...Unlike industry, where rising labor costs have been offset by greater productivity through automation, hospitals cannot automate most of their services...

...Between 1960 and 1970 the Federal Government's expenditures for health care have soared from $3.5 billion to more than $18 billion a year...

...This has sharply raised Federal and state expenditures for medical care and led to a rash of successive increases in Blue Cross premium rates...

...The solo practitioners included sixty^ eight known to have collected $100,000 or more each...

...Smaller community hospitals fill many important needs...

...The patient has no way of knowing whether he is getting good advice from his doctor, whether the drugs he has been given are the right kind and free of hazardous side effects, or how competent a job his surgeon has done...

...There is no question, according to many authorities, that hospitalization has been oversold and that the most effective way of cutting overall costs is to keep people out of the hospital unless they really have to be there...

...The status quo is clearly wasteful and on the verge of breaking down completely...

...The prevalent system under which hospitals are generally reimbursed by the insuring agencies for whatever they prove their costs to be has further weakened motivation for efficiency...

...James G. Haughton, head of the Federal study committee which recommended the freeze, said: "There are many things which have been permitted in the name of democracy which now are proving to be luxuries we cannot afford...

...And because it is an assistance rather than an insurance program, it involves much more red tape...

...But with such conditions as the degenerative ailments and congenital abnormalities coming more and more to the fore, the length of stay has started going up again in the last few years and now stands at an average of 8.4 days...

...Ample opportunities for economy also exist in the area of physicians' services...

...The present system, in which thousands of doctors are engaged in small business enterprises operating independently and duplicating personnel and equipment, is ripe with inefficiencies and openings for abuse...

...But it will take time for most physicians, accustomed as they are to operating as individual entrepreneurs, to learn to work in group settings and to readjust themselves to professional and, to some extent also, to lay controls...

...It, like this article, is the work of Selig Greenberg, prize-winning writer on medicine for The Providence Journal and Evening Bulletin...

...But because it is patterned on devices borrowed from private insurance for requiring patients to share costs and leaves out some services altogether, it falls far short of need...

...Ironically, the precedent set by the Medicaid law and the part it has played in pushing up health care prices raise the specter of far more serious problems in the not too distant future...

...This characteristic has been aggravated in the last few years by the agrowing role of insurance payments in hospital financing and the resulting decreased relevance of price to the covered patient, who is no longer required to pay the full bill...

...He determines what tests are to be made or X-rays taken...

...The cost problem hovers over every policy decision in medical care...

...While Medicare has the advantage of universal coverage for its age group and uniform nationwide standards, Medicaid differs in three major ways, all of which work to its disadvantage...

...With most hospitals still run as empires in themselves, the medical staffs often demand and get costly equipment for their own use, even though it may be available and under-utilized only a few blocks away...

...But thirty per cent of these hospitals did not use the equipment for a single such operation in the year under study...

...But they share with Blue Cross, Blue Shield, and other insurance carriers a common weakness which critics regard as the primary reason for the inefficiency of health care delivery and the inflationary price curve...

...The antibiotics have been not only the outstanding achievement of medical science in the first half of this century but also our biggest bargain...

...A number of other housekeeping services could conceivably be farmed out for more efficient operation...

...There are a number of good reasons for the cost escalation, particularly in the hospital field...

...Senate Finance Committee, 4,300 individual doctors, plus an additional 900 physician groups, each received at least $25,000 from Medicare in 1968...

...Some experts have suggested that greater economy could be achieved by turning over to industry those functions which do not require direct contact with patients...

...The result is that payroll costs now account for nearly seventy per cent of hospital expenditures...

...They reimburse hospitals on the basis of "reasonable costs," which in practice means whatever each hospital wants to spend...

...The nation's short-term hospitals now have an average of 276 employes for each 100 patients...

...A telling indication of the waste involved when hospitals seek to outdo one another with the latest piece of equipment was provided a few years ago by the President's Commission on Heart Disease, Cancer, and Stroke...

...What a difference this makes in cost may be seen from the estimate that if the average length of stay in the nation's hospitals could be reduced by a single day, it would produce a saving of more than $1.7 billion a year...

...At any rate, it cannot be argued that the public interest should be subordinated to the grasping self-interest of the medical profession...

...It is, moreover, a system in which physicians bear no responsibility for the prevention of disease or for measures calculated to maintain health, but rather wait for patients to seek help, often when the end results of neglect have caught up with them and frequently not until they have reached the crisis stage...

...Plealth care costs took off on a new orbital course after the inauguration of the Medicare and Medicaid programs in mid 1966, showing what happens when major changes are made in the financing of services without concurrent changes in the supply and organization of resources...

...In the face of severe shortages, there lis much needless duplication of hospital facilities and services...

...In a three-year period following the start of these programs, hospital charges ballooned by fifty-five per cent and doctors' fees rose by more than twenty-five per cent, or two-and-one-half times their previous rate of increase...

...There is impressive evidence that when health services are more efficiently planned and organized, costs can be reasonably contained and much more quality service can be provided for the same money...

...Both Medicare and Medicaid have turned out to be a veritable bonanza for the medical profession by enabling doctors to charge high fees for elderly and low-income patients whom formerly they had often treated at reduced fees or free of charge...

...Our ability to provide adequate health services to all, a universally recognized goal to which we are now committed by law, clearly depends on whether we can find ways to control runaway inflation of medical prices...

...Even doctors who have been in practice for only one to five years now have averaged annual net earnings of about $29,000...

...But they also owe something to the community, which heavily subsidizes their education and provides them with workshops in hospitals...

...It is becoming increasingly evident that pouring more money into the present system without doing something about its inefficiencies only exacerbates the crisis...

...Doctors undergo lengthy and strenuous training...

...In an effort to stem the tide of price increases, the Federal Government recently imposed a temporary freeze on doctors' fees under Medicare and Medicaid and also tightened up the hospital reimbursement formula...

...Since then the per capita cost has jumped tenfold, to nearly $300...

...Because the two programs serve different groups, they have somewhat different structures...

...The continued expansion of scientific knowledge and tools is forcing hospitals to keep on raising the ratio of personnel to patients and requires higher skills and more costly equipment...

...But many of the forces in our system work in the opposite direction...

...A vivid example of how medicine keeps on moving toward ever more complex and protracted procedures is provided by what has been happening lately to the average length of hospital stay...

...On the other hand, twelve surgeons who were technically qualified but lacked practice had a thirty per cent mortality rate, and one of them lost every patient...

...He is the one who says, "Come back in a few days and let me take another look at it...

...Not infrequently, patients cannot be discharged as promptly as possible because there is no appropriate place for them to go...

...The costliness of equipment that is rarely used is not the only issue here...

...Despite skyrocketing costs, the program remains poorhouse legislation and does not come anywhere near meeting the health care needs of the indigent...

...But while the grosser kinds of discrimination against the group plans have largely disappeared, the profession continues to view this form of practice with suspicion as a portal to the socialization of medicine...

...It is administered by the states and varies greatly in comprehensiveness, with the Federal Government paying fifty per cent of the costs in the richer states and as much as eighty-three per cent in the poorer areas...

...According to a staff report of the U.S...

...There already are some kitch-enless hospitals using precooked foods...

...The Progressive has scheduled a series of articles over the entire year exploring significant aspects of the basic problem of medical economics...

...Medicare has gone a long way toward solving the medical-care problems of the elderly...

...In its first year of operation in fiscal 1966, Medicaid cost $1.2 billion...

...The doctor is not only the supplier of medical care but also the patient's chief adviser on how much of it he should purchase...

...The principal objective of the health-service system of the future will be to keep people out of hospitals as much as possible...

...Now the average charge is about $70 a day for room, board, and nursing care, exclusive of ancillary services, and within a few years it is expected to hit $100 a day, a level already in effect in some major metropolitan teaching hospitals...

...What finally tipped the scales was not so much the voting power of the aged themselves as mounting pressure from their grown-up children, who could no longer afford to pay their elderly parents' soaring medical and hospital bills...

...Copyright © 1971 by Selig Greenberg...

...Treasury by allowing them to set the scope of their own programs, it has proved to be a tremendous drain on state treasuries as well...

...While the Medicaid law gives the states what amounts to a blank check from the U.S...

...Insurance benefits are predominantly concentrated on coverage of inpatient services and thereby encourage patients to seek hospitalization even when it is not absolutely necessary...

...Nor are there any restraints to prevent excessive fees...

...Authoritative estimates are that since 1955 the pretax net income of the average doctor in private practice has gone up two-and-one-half times, from $16,000 to close to $40,000 a year...

...He prescribes the drugs for which the patient must pay...

...Why You Can't Afford to Be Sick by SEUG GREENBERG One of the major debates in Congress this year will focus on the high cost of medicine and the need for remedial legislation to bring health within the reach of all Americans...

...The Editors A mericans are now spending about $165 million a day in the pursuit of health...

...On the average, Medicare benefit payments now meet only about forty-five per cent of the total health care expenditures of the aged...

...Within about two decades, this tool for the control of infectious disease was largely responsible for the enormous savings of bringing down the average length of hospitalization from twenty-one to 7.1 days...

...In recognition of the possible baneful consequences of the consumer's vulnerability, society has granted organized medicine wide powers to maintain quality standards and police the profession...

...Between 1963 and 1968 their employment rolls rose by one-third and their payroll costs by eighty-three per cent...

...Fully one-third of the hospital capacity in the United States is provided by hospitals with fewer than 200 beds, a size generally regarded as the cut-off line for efficient operation, and there are hundreds of institutions with fewer than 100 beds...

...There are still unrealized possibilities for savings in joint purchasing by groups of hospitals and in such other joint enterprises as the operation of laundries, laboratories, and data systems...

...they work long hours and are fully entitled to a reasonably high standard of living...

...To us, there are no poor...

...Those least able to pay are most severely affected by such features of private insurance adopted by Medicare as co-insurance, which means that the patient must meet a certain percentage of the costs, and deductibles, which means that the patient must first pay part of the bill before he becomes eligible for benefits...

...Medicare's annual costs have been more than doubled within three years, from $3.2 billion to $6.5 billion...

...It is hardly surprising that publications circulated free of charge to physicians are full of investment advice and heavily sprinkled with advertisements for Cadillacs, high-powered cruisers, vacation trips to Majorca and Morocco, and African safaris...

...They make no attempt to change the manner in which services are delivered, fail to set any standards for professional practice, and dole our money to the providers of care without exercising any real leverage over costs...

...The hospital system will have to be restructured, through regional planning, so that patients in need of complex procedures are routed to hospitals with the required personnel and equipment, enabling them to make maximum use of these facilities, while less complicated services are provided elsewhere...

...In only fifty-six medical centers were there several open-heart operations every week...

...But, never having been more affluent, the medical profession is desperately trying to preserve the status quo...

...As the financial squeeze grows steadily worse, the legislators are sure to get the message from their constituents about the urgency of some far-reaching reforms...

...Thirty years ago the annual per-capita expenditure for health services in the United States was $29...

...This has inevitably resulted in runaway costs...

...Competent opinion is that anywhere from twenty per cent to one-third of the patients in hospitals at any given time do not really require such elaborate care and could be just as well cared for at much lower cost if suitable facilities were made available elsewhere...

...If the price curve keeps going up at the rate of the past few years, the costs of medical services will become so inordinate in relation to the average person's income that a large proportion of the population may become eligible for Medicaid...

...As a result of a number of court decisions and shifting trends in the climate of opinion, doctors joining prepayment groups are no longer deprived of hospital privileges or threatened with expulsion from medical societies, as was the case some years ago...

...I challenge the speaker's charge that we have one health care system for the rich and another for the poor...

...Physicians themselves sometimes tend to put patients needlessly in the hospital for greater convenience and the economy of their own time...

...Above all else, there is a great potential for economy in a reduction in the rate of hospitalization, the most expensive form of care...

...Less than half of this fifteen-fold jump in costs is attributed to the growth of the country's population and greater utilization of medical services...

...It is available only to the medically indigent, with widely varying eligibility requirements set by each state...

...The status quo is clearly wasteful and on the verge of breaking down completely/1 Medicine is the only big business in which the ultimate consumer not only lacks the requisite knowledge for making a rational choice but has almost no control over what he buys...

...The pitfalls of laissez-faire medicine are well illustrated by the distressing experience of the big Medicare and Medicaid programs...

...Group practice prepayment plans have demonstrated that it is possible to provide compre-ering more and more in hospitals and professional buildings because of their interdependent needs...

...The first of the series, "Poverty and Health Care: The Legacy of Neglect" appeared in our February issue...

...One such area is that of food services...

...One of these is permitting the medical profession to charge on the basis of what the traffic will bear.5' It took years to get the Medicare law through Congress over the bitter opposition of organized medicine...

...And when they acquire costly machines, it is generally not to deliver the same product more cheaply but to deliver a better product, often at increased cost to the consumer...

...But, unfortunately, these monopoly powers are far more often exercised to protect the profession's guild interests than to blow the whistle on incompetent performance or unethical practices...

...The trek to the hospital can be reversed only with the provision of suitable alternatives and of adequate insurance coverage for these substitutes...

...Of the hospitals that did have open-heart surgery, eighty-seven per cent did less than one operation a week...

...In 1940 we spent about $4 billion, or four per cent of the gross national product, for physicians' services, hospital care, drugs, and other health needs...

...In 1946 a patient could get away, on the average, with paying less than $10 for a day in the hospital...

...He orders hospitalization, and the patient rarely has any choice...

...Hospital employes have long been notoriously underpaid, and their wage scales and working hours are finally beginning to approach parity with people employed in other fields...

...Both articles are adapted from The Quality of Mercy: A Report on the Critical Condition of Hospital and Medical Care in America, just published by Atheneum Publishers...

...The commission reported that 777 hospitals had by that time acquired all of the costly facilities for open-heart surgery...