Are You Surprised by This?
In a third-party payer system, providers have an incentive to maximize against the payment formulas. Guess what? Incentives matter!
Take this report on Health Management Associates, the nation’s 4th largest for-profit hospital chain, who maintained productivity quotas for physician employees –
According to the “60 Minutes” report, HMA hospitals pressure doctors to admit patients by setting admission quotas. Dr. Clifford Cloonan and Dr. Scott Rankin, two former employees of Carlisle Regional Medical Center, were among a handful of former HMA workers interviewed by Kroft, who said the company has a benchmark of 20 percent admissions for emergency room patients. Patients older than 65 have a 50 percent benchmark… “It has nothing to do with patient safety and patient care. It has everything to do with generating revenues,” Rankin said in the report.
not surprised-incentives are powerful tools. things need to change if they are admitting a certain number of people just to meet a quota
Again, not very surprised. The perverse incentives within the system place profits above patient care.
Our system of physician licensure, where physician care is a cottage industry is not very efficient. Hospitals must rely on doctors to admit patients; a hospital cannot merely admit patients just because a patient needs a heart surgery. A physician has to say a patient needs admitted for heart surgery. Thus, hospitals need doctors. Yet, historically, doctors could retain their independence from hospitals and generally did so.
If health care were a competitive industry, hospitals would probably find it advantageous to employ doctors to better compete and coordinate care. Under a non-competitive marketplace, hospitals are increasingly employing doctors because hospitals can bill more for the same services than physician offices can bill for. Thus, doctors can work for hospitals and still command lucrative salaries and the hospital can afford to pay them. It’s a form of collusion to scam the taxpayer, where hospitals employ doctors and force physician-employees to help maximize revenue against reimbursement formulas. This is not uncommon. A manufacturing firm employs engineers, whose job it is to build products that other firms (or consumers) will purchase. The difference is hospitals are not competing on price and efficiency. They are competing to extract as much revenue from third-party insurers as possible. Why would the quota of ER patients admitted be different for seniors than younger people? The answer probably has to do with the fact that Medicare doesn’t scrutinize patient admissions as much as private insurers.
That’s pretty terrible, but it will also happen if only private insurance companies are involved. But at least the incentive is at to provide more services.
Money is a powerful tool!
Not surprised.