Tuesday, June 26, 2007

California hospitals going bust because of unpaid or underpaid bills

The poor MUST be treated regardless of ability to pay but government reimbursements for such care don't cover costs. Only in high income areas where most people ARE insured are hospitals doing OK. The graph below shows how insane the system is. As the population grows, hospital beds are becoming LESS available. Note the sinking red line in the top graph. The problem is nationwide

A tiny Sonoma County hospital is losing $500,000 a month. A cash-strapped Tuolumne County hospital is shutting most operations next week. But Sacramento-based Sutter Health reports a 33 percent jump in earnings. Increasingly, the financial state of California's hospitals can be summed up as a tale of the haves vs. the have-nots. As is often the case in such stories, researchers told state officials during a Capitol briefing Friday, the rich are getting richer and the poor, poorer. More than a third of the state's 355 acute-care hospitals lost money in 2005, according to the study funded by the California HealthCare Foundation, an independent think tank in Oakland. "Hospitals are critical. Failure rate is a big concern," said Scott Burns, a consultant at PriceWaterhouseCoopers and one of the authors of the report.

For consumers, fewer hospitals and beds could mean shortages in some communities and could drive up costs. In particular, the squeeze would be felt by those who depend on hospitals that receive the lion's share of their revenue from government sources, including Medi-Cal. Although the breadth of the problem is daunting, the number of money-losing hospitals is an improvement over six years ago, when roughly half of them operated in the red and industry experts predicted massive closures. Instead, between 2001 and 2005, the state lost 7.3 percent of its hospitals even as the overall occupancy rate rose by 3.2 percent, according to the report, but the authors warn California residents that key medical centers and hospitals remain vulnerable to bankruptcy and closure.

The foundation's report noted that hospitals with the worst financial performance derive 65 percent of payments from government reimbursements. In contrast, the best performers receive 63 percent of revenue from private insurance payments. Researchers say government reimbursements simply do not cover hospital expenses. "There's no question that hospitals are losing money from Medi-Cal and county indigent (reimbursements)," said Joanne Spetz, a health economist at the University of California, San Francisco. "You look at these facilities, and some are in really bad shape. They can't go on forever." The issue can't be ignored in some communities, she added: "Some ... are really safety-net hospitals. Policymakers need to address these."

Think things are bad now? In the coming years, hospital leaders will grapple with replacing buildings that do not meet more stringent seismic safety standards, a boom in the population of aged individuals, and the demand by this population for new medical technology. Hospitals also will continue to deal with ballooning payrolls fueled by shortages of nurses, pharmacists and other specialists, a growth in patient debt from those unable to pay and a burgeoning uninsured population.

As a whole, the state's hospitals are operating at razor-thin profit margins -- a median of 1.3 percent, compared with 2.9 percent nationally. Put into dollars, hospitals in 2005 spent $2,116 a day per patient while earning $2,122 in revenue -- a $6 operating profit. Still, that's double the $3 they earned in 2001.

The report highlights wide disparities across California, from profitable hospital chains in Sacramento and the Bay Area to ailing medical centers in the Los Angeles region and rural areas. In the Sacramento area, for example, the profit margin is a healthy 10 percent -- attributed largely to the dominance of Sutter Health and Catholic Healthcare West, parent of the capital's Mercy and Methodist hospitals. The report said profitable hospitals tend to be larger (150 or more beds), receive more private insurance payments than government reimbursements and exist in affluent urban communities.

"There are a number of hospitals in Los Angeles that are having to struggle. You don't have a dominant provider. You do have a lot of competition," said David O'Neill of the California HealthCare Foundation, created in 1996 with a $2.2 billion endowment from Blue Cross of California as part of concessions that allowed it to convert to for-profit status.

Anne McLeod, vice president of economic analysis for the California Hospital Association, said the toughest battles for survival are being waged in rural areas, in low-income communities or at facilities operated by counties or special districts. More than 80 facilities have sought more than $140 million in financial aid from the special state fund for financially ailing hospitals, McLeod said. The fund had about $23 million available.

On one end, there are hospital groups such as Sutter Health, which reported that its net income grew 33 percent, to $587 million, in 2006. The income will help fund an aggressive $6.6 billion Northern California expansion over the next decade. On the flip side, there are teetering facilities. In April, Palm Drive Hospital in Sebastopol filed for bankruptcy protection, buried under nearly $3 million in debt. County-run Tuolumne General Hospital in Sonora will shutter its emergency room and discontinue surgeries, intensive care and other medical services on June 30. In the Bay Area, Doctors Medical Center in San Pablo needs $25 million in capital to emerge from bankruptcy protection and ensure its long-term future.


NHS shafts carers

Thousands of dementia sufferers are being denied access to crucial drugs because of "critical errors" by the Government's drug watchdog, the High Court is to be told today. The National Institute for Health and Clinical Excellence (NICE) is accused of using "flawed and out-of-date figures" to play down the impact of the drugs on the lives of carers of dementia sufferers. When it decided to restrict access to three key drugs, NICE concluded that even on the most optimistic assessment, the benefit to carers of more widespread use of medication was negligible.

Central to the case being presented by the Alzheimer's Society today is its calculation that the drugs, which slow the progress of dementia, can save carers an hour and a half each day in caring duties. The society, which represents dementia sufferers and their families, will also tell the court that NICE underestimated the cost of full-time residential care at 355 pounds a week. In fact, the weekly cost can be 1,500. The charity says that wider use of the drugs would help dementia sufferers to stay in their homes longer, saving local authorities millions of pounds.

The case, the first legal challenge to a NICE decision, has been brought by Eisai, the licensed holder of one of the three drugs in question. The pharmaceutical company Pfizer is backing Eisai's case. The Alzheimer's Society is acting as an "interested party" in the judicial review. Its evidence on how carers could benefit from wider use of the drug is new to the case. It will run until Thursday. The judge will then take several weeks to reach a decision. The court can order NICE to reconsider.

In 2005 NICE said that the three drugs, Aricept, Reminyl and Exelon, should not be available on the NHS. After a protest by those affected, NICE reconsidered and decided that the drugs could be prescribed, but only to people with middle-stage dementia. Five appeals were rejected, and a judge ruled in April that there were grounds for a judicial review. NICE has never said how much its decision to restrict access to the drugs would save the NHS, but experts put it at about 9.4 million a year.

Neil Hunt, chief executive of the Alzheimer's Society, said: "These treatments have benefited so many families. Where is the justice in NICE's decision to snatch them away? Another 100,000 people will develop dementia this year."

Andrew Dillon, chief executive of NICE, said: "Non-drug interventions have an important part to play and the evidence indicates that drugs are not effective for some patients."

Elsie Johnson is certain that her husband, Alan, 68, has benefited greatly from the Aricept he was prescribed as soon as his Alzheimer's was diagnosed in 2000. Under NICE's guidelines, he would have had to wait until his condition had deteriorated. Seven years on, the couple can still go on holiday, shop and take outings near their Gateshead home. "A month or two after he was put on Aricept, he really perked up and started to take more interest in life. We lead a pretty good life together," Mrs Johnson told The Times. "It is a terrible situation when psychiatrists are telling their patients that they know they have Alzheimer's and they know what will help, but they can't do anything until they get worse, so come back in a year." She added: I don't understand why scientists are spending time and money developing new drugs if NICE is going to stop people from getting them."



For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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