To the Editor:
In perusing John Henderson’s obviously obligatory plea for increased Medicaid payments to compensate for “underpayments” to rural hospitals (Salado Village Voice 1/24/2019), I recalled the tongue-in-cheek business plan of an area doctor: “Buy something for a dollar and sell it for ten dollars. If you can’t make it on a ten percent markup, you don’t deserve to make it.”
He really wasn’t joking.
For decades I negotiated purchase contracts for hospitals who often billed at even greater margins.
What Henderson calls underpayments are actually government and insurers’ negotiated refusals to pay hospitals’ excessive “list prices” for goods and services. That has already been tried.
Originally Medicare paid providers on “cost based reimbursement” factored by an allowable “profit”. Institutions rapidly increased “costs” to maximize the allowed profit. Overnight I saw an aspirin tablet go from a no-charge floor stock item to a one dollar per tablet patient/payer charge. Private insurers were fine with that – it was a good excuse to raise their premiums.
Finally, in the 1980s, Medicare implemented DRGs through which it paid for goods/services predicated on regional averages. If the providers’ cost met or was under the average, they made money – otherwise they didn’t. This format encouraged cost savings and better patient care.
A review of any Medicare bill reveals the disparity between providers’ dollars “charged” and payment amounts accepted. Yes, providers did then and still do scream bloody murder, but that is nothing like they would if the government payers went away.
No consumer should want Texas’ rural hospitals and clinics to close, but much of their problem is a self-inflicted wound. Some in rural hospitals believe that more Medicaid volume is the answer, not higher reimbursements. Rural hospital closures snowballed when Texas’ leaders refused to participate in Medicaid expansion under the Affordable Care Act. So called “expansion states” did not suffer similarly.
Feigning economic considerations, the Austin clique denied access to billions (with a “B”) in federal funds that would have helped Texas hospitals while supporting trillions (with a “T”) in tax cuts to undeserving corporations. (An Urban Institute study in 2014 estimated that not expanding Medicaid would deprive Texas hospitals of $34.3 billion in federal reimbursements over 10 years.)
However, rural hospitals seem to have no hope that the Republican Texas legislature and governor will get behind expansion, and in John Henderson’s own words, “There is no likelihood of Medicaid expansion in Texas in the near term.”
Also, as with many healthcare entities, expenses are often a bigger culprit than income. Foremost are multiple administrators with excessive salaries; ridiculous prices paid for questionable technologies; and loose management. Some hospitals do make a lot of money. One only needs to look at mergers and acquisitions of entire hospital systems by other institutions making much of Central Texas a non-competitive healthcare desert where patients must choose between closed, integrated relationships in which some feel there are no second opinions and religious-affiliated institutions upon which women of child bearing age might be wise to look askance.
Increasingly U.S. citizens are realizing that the solution to the problems of cost, quality and delivery of healthcare services to the populace will be universal, single-payer coverage. This is the only way to address inadequate access, inconsistent care, deceptive pricing, waste, fraud, and the lack of economy of scale. Our forefathers fought a revolution declaring a right to life – access to healthcare is essential to life, and in the U.S. it should be a right.