Demystifying Medicine One Month at a Time

Docs & the Means of Production

It was bound to happen.

Better quality to the Right.

Better quality to the Right.

By “it,” I mean that the small group of speciality hospitals (usually orthopedic or cardiology-focused) across that country that are owned by doctors were going to have their “See! We Told ‘ya so!” moment.

Doctor-owned hospitals: How many are there? Two hundred and thirty-eight of them in the whole country (out of more than five thousand)–somewhere between four and five percent of the total in the U.S. (numbers courtesy TA Henry from this excellent piece).

What are the issues?

  1. ObamaCare effectively bans doctors from owning hospitals in the U.S.
  2. Those already in existence are grandfathered in under the law.
  3. We know that doctor-owned hospitals have higher average costs–hence the rationale for banning them under a law with the intent of “bending the cost curve.”

Cue the iron-o-meter:

In the most recent Medicare data (December 2012 report on “value-based purchasing“), doctor-owned hospitals did well in terms of achieving quality milestones.

How well?

Really well. Physician-owned hospitals took nine out of the top ten spots in the country. And in spite of their low relative number, forty-eight out of the top one hundred.

What’s the secret sauce? Here’s a little tidbit on the #1 ranked hospital from another excellent piece on this issue (J Rau of Kaiser Health News):

The top one is Treasure Valley Hospital in Boise, Idaho, a 10-bed hospital that boasts a low patient-to-nurse ratio and extra attention, right down to thank-you notes sent to each discharged patient.

A 10-bed hospital? Thank you notes for each discharged patient? Sign me up to go there next time I need hospital services.

Who cares? Well, we all should. Why?

It boils down to incentives.

When doctors own the hospitals, they stand to directly share in profits. If you’re a doctor-owner, and the hospital you both run and own is functioning at a high level, you think, “This is what America is all about. Free enterprise. Why shouldn’t I make more money if my hospital runs well?”

As a taxpayer, do I want government incentives going to hospitals that are privately owned and known for cherry-picking insured patients?

Moreover, what does it say about public hospitals, or academic centers, that often see the sickest, poorest, most vulnerable patients? Yes, their quality is measurably lower, according to this data. But now, in spite of staying true to their core missions (serving the public) they’re being further penalized.

Is this just another case of the rich simply getting richer?

Maybe ObamaCare’s got it wrong. Maybe we should build upon the model of doctor-ownership and turn over public hospitals to their workers. All of them. Let the nurses buy in. And the food handlers. And the “environmental services” folks (i.e. custodial crews). Let’s really let the workers own the means of production. Then we can see where incentives get us.

2 Comments

  1. Justine

    Syndicalism. Yes.

  2. Carolyn Thomas

    What this report reveals is that cherry picking works. As the Kaiser Health News piece puts it:

    “Physician-owned hospitals … do not take the heart failure and heart attack cases that Medicare analyzes when determining whether to levy a penalty.

    “They also tend to have far fewer low-income patients. It’s a population that is generally less able to buy medications, pursue follow-up appointments, and find help while recuperating – problems that often send patients back to the hospital.”

    Thus you see variations even among hospitals situated within the same organization, like Mayo Clinic’s Methodist Hospital, which primarily does elective surgeries (it will receive bonuses) compared to Mayo’s flagship St. Mary’s Hospital, which does trauma and emergency cases (and will be losing money).

    So if docs who own their own hospitals can cherry-pick for low-acuity patients who are well-off (or well-insured), is it any wonder that the safety net hospitals are being penalized?

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