TIME MAGAZINE: ‘A Week In The Life Of … A Hospital’
The cover story of this week's Time Magazine is entitled, "A Week in the Life of ... A Hospital." The article and a long series of sidebars and vignettes look at how one hospital -- Duke University Medical Center -- is adapting to the new realities of managed care and reduced government health care spending. According to Time, academic hospitals nationwide "are trying to figure out how to marry progress with profits, how to come up with the money that will let them continue to lead the world in death-defying discoveries, without going bankrupt in the process." In the past, teaching hospitals made a practice of charging higher prices to private insurers and pouring that "profit into all the extremely unprofitable things they do: teach students, do research and treat the poor." But that financing scheme came undone, as "managed care companies and government cutbacks began shrinking those payments, and for-profit hospital chains started buying up community hospitals and competing for patients and revenues."
Duke University Medical Center leaders have embarked on a multi-faceted effort to keep the hospital financially healthy, but they are not overly optimistic. "If we were a business, we'd go under. We're not patient friendly. We're not market sensitive. We're profligate, wasteful and arrogant. We have to change. But that doesn't mean we have to sell our souls," said Duke CMO Peter Kussin. Duke "is buying up, merging or affiliating with doctors' practices, a community hospital, a hospice, a home-care agency and even its own managed care operation." According to Time, the "idea is to insure a steady stream of patients into the system; to build a network that ensures that no one stays in an expensive intensive-care-unit bed who could be moved down to the wards or even out to a skilled-nursing facility; to develop enough market clout to negotiate discounts with suppliers and insurers; and to place enough emphasis on preventive care and public education so diseases are caught early, before they require the kind of expensive care that has driven costs so high." Ralph Snyderman, chancellor of Duke Medical Center, said, "The best medicine will be cost-effective medicine. And we're betting the hospital on that." But Time notes that Duke's strategy may not pay off: "Only in theory does prevention save money, and there is an argument that the opposite is true. Everyone is going to die of something; helping people avoid heart attacks and strokes may well mean the patients will wind up with more chronic illnesses that cost more money to treat over the course of their lifetime" (10/12 issue).
Tough Time For Nonprofits
Yesterday's Dallas Morning News looked at how a growing number of north Texas independent, nonprofit hospitals are being forced to join larger health systems. The newspaper noted that "[j]ust five of nine local medical centers that stood independent in 1997 remain so. Three are now part of hospital systems, and the other has filed for bankruptcy." Consumers Union analyst Lisa McGiffert said, "The nature of our health care system right now makes it difficult for independent hospitals to hang out there on their own." Ernst & Young health care consultant Kenneth Bernstein said "stand-alone hospitals must stress what their businesses have to offer -- location, special services or new technologies." He added, "There's certainly room for some independent hospitals in markets like the [Dallas-Ft. Worth] metroplex, but it will continue to be a tougher and tougher row to hoe. These hospitals will always know their communities better and have to really take advantage of that" (Ornstein, 10/4).