posting
03-22-2006, 06:02 PM
The View from Myrtle Beach by Richard Tindal
This is the fourth in an occasional series of articles depicting the similarity of local government issues north and south of the border
What If Patients Were Revenues Instead of Costs?
While this series has been about similarities north and south of the border, the focus this time is on a major difference - in the way hospital patients are funded and in the impact this has on the way hospitals operate.
We are all familiar with the situation in Canada, with its system of public hospitals. Growing health care costs, largely related to an aging population, have led to repeated government efforts to hold the line, with particular emphasis on controlling hospital costs. Ontario hospitals are now required to sign accountability agreements with the province that include a balanced budget commitment. In some cases, hospitals have resorted to extreme measures such as closing their emergency departments for a couple of weeks as a way of reducing costs - even though the result is to shift the workload and cost to other hospitals in the area or to leave people without any service. A great deal of energy is also expended in lobbying the provincial (and federal) government for additional funding for hospitals so that services can be maintained or expanded. Without such additional funding, the prevailing mindset appears to be one of retrenchment. In this context, patients are inevitably viewed primarily as a cost. Fewer patients, rather than more, is the preferred situation.
The approach and orientation of the private hospitals in South and North Carolina provides a marked contrast. Far from retrenching, their objective is to grow bigger and they aggressively pursue more business. The more patients, the better, since that is their source of revenue, not the state or federal government. While Ontario hospitals seek government funding so that they can add more beds or maintain existing levels of service, the Carolina hospitals add more beds so that they can generate more funding (revenues) - as long as the need for beds is certified by the state government. Hospitals down here also actively market themselves. They frequently hold clinics on various aspects of healthy living - not only providing valuable health promotion but also developing the kind of brand loyalty that may prompt attendees to choose their hospital when they need care in the future.
This markedly different operating milieu came to light recently when a new medical administration firm took over a hospital in Brunswick County, north of Myrtle Beach and not far from the border with North Carolina. The firm has pledged to move quickly on an expansion of beds and has pledged millions to recruit physicians to the area. Other nearby hospitals are watching with some concern, wondering what the effect will be on their operations and customer base. Industry experts indicate that the eventual impact could be lower costs and a greater availability of services.
It should be emphasized that I am not endorsing the American system of health care. The fact that more than 45 million Americans are not covered by any health care plan remains a national disgrace. I am merely pointing out one aspect of a private hospital system, and contrasting it with the way the Canadian public hospital system operates. When patients are revenues rather than costs, the motivation for hospitals is to expand, not to scale back and shift workload to others. I acknowledge that competition among hospitals can lead to the same abuses found in other private sector operations. Under intense pressure to cut costs (and to generate profits for the private corporations that run these hospitals) service standards can be eroded.
Perhaps the challenge for the hospital system in Ontario is to find a way of mimicking the competitive pressures inherent in the American, market-based hospital system. The Ontario government has begun to recognize superior hospital efficiency in the way in which it awards hospital funding, rather than simply bailing out those hospitals with the largest deficits. That is certainly a step in the right direction. One can only hope that the new and highly controversial LHINs (Local Health Integration Networks) will find a way to strike the difficult balance between competition and collaboration in the delivery of hospital and other health care services.
The other articles in this series can be found at the following links:
The View From Myrtle Beach: Property Taxes Are Beloved Everywhere (http://www.kingstonelectors.ca/forums/showthread.php?t=1204)
The View From Myrtle Beach: Taking the Bus (http://www.kingstonelectors.ca/forums/showthread.php?t=1203)
The View From Myrtle Beach: Be Careful What You Wish For - Property Tax Reform (http://www.kingstonelectors.ca/forums/showthread.php?t=1202)
The View From Myrtle Beach: What If Patients Were Revenues Instead of Costs? (http://www.kingstonelectors.ca/forums/showthread.php?t=1201)
The View From Myrtle Beach: Rocky Movies and Property Tax Reforms (http://www.kingstonelectors.ca/forums/showthread.php?t=1200)
This is the fourth in an occasional series of articles depicting the similarity of local government issues north and south of the border
What If Patients Were Revenues Instead of Costs?
While this series has been about similarities north and south of the border, the focus this time is on a major difference - in the way hospital patients are funded and in the impact this has on the way hospitals operate.
We are all familiar with the situation in Canada, with its system of public hospitals. Growing health care costs, largely related to an aging population, have led to repeated government efforts to hold the line, with particular emphasis on controlling hospital costs. Ontario hospitals are now required to sign accountability agreements with the province that include a balanced budget commitment. In some cases, hospitals have resorted to extreme measures such as closing their emergency departments for a couple of weeks as a way of reducing costs - even though the result is to shift the workload and cost to other hospitals in the area or to leave people without any service. A great deal of energy is also expended in lobbying the provincial (and federal) government for additional funding for hospitals so that services can be maintained or expanded. Without such additional funding, the prevailing mindset appears to be one of retrenchment. In this context, patients are inevitably viewed primarily as a cost. Fewer patients, rather than more, is the preferred situation.
The approach and orientation of the private hospitals in South and North Carolina provides a marked contrast. Far from retrenching, their objective is to grow bigger and they aggressively pursue more business. The more patients, the better, since that is their source of revenue, not the state or federal government. While Ontario hospitals seek government funding so that they can add more beds or maintain existing levels of service, the Carolina hospitals add more beds so that they can generate more funding (revenues) - as long as the need for beds is certified by the state government. Hospitals down here also actively market themselves. They frequently hold clinics on various aspects of healthy living - not only providing valuable health promotion but also developing the kind of brand loyalty that may prompt attendees to choose their hospital when they need care in the future.
This markedly different operating milieu came to light recently when a new medical administration firm took over a hospital in Brunswick County, north of Myrtle Beach and not far from the border with North Carolina. The firm has pledged to move quickly on an expansion of beds and has pledged millions to recruit physicians to the area. Other nearby hospitals are watching with some concern, wondering what the effect will be on their operations and customer base. Industry experts indicate that the eventual impact could be lower costs and a greater availability of services.
It should be emphasized that I am not endorsing the American system of health care. The fact that more than 45 million Americans are not covered by any health care plan remains a national disgrace. I am merely pointing out one aspect of a private hospital system, and contrasting it with the way the Canadian public hospital system operates. When patients are revenues rather than costs, the motivation for hospitals is to expand, not to scale back and shift workload to others. I acknowledge that competition among hospitals can lead to the same abuses found in other private sector operations. Under intense pressure to cut costs (and to generate profits for the private corporations that run these hospitals) service standards can be eroded.
Perhaps the challenge for the hospital system in Ontario is to find a way of mimicking the competitive pressures inherent in the American, market-based hospital system. The Ontario government has begun to recognize superior hospital efficiency in the way in which it awards hospital funding, rather than simply bailing out those hospitals with the largest deficits. That is certainly a step in the right direction. One can only hope that the new and highly controversial LHINs (Local Health Integration Networks) will find a way to strike the difficult balance between competition and collaboration in the delivery of hospital and other health care services.
The other articles in this series can be found at the following links:
The View From Myrtle Beach: Property Taxes Are Beloved Everywhere (http://www.kingstonelectors.ca/forums/showthread.php?t=1204)
The View From Myrtle Beach: Taking the Bus (http://www.kingstonelectors.ca/forums/showthread.php?t=1203)
The View From Myrtle Beach: Be Careful What You Wish For - Property Tax Reform (http://www.kingstonelectors.ca/forums/showthread.php?t=1202)
The View From Myrtle Beach: What If Patients Were Revenues Instead of Costs? (http://www.kingstonelectors.ca/forums/showthread.php?t=1201)
The View From Myrtle Beach: Rocky Movies and Property Tax Reforms (http://www.kingstonelectors.ca/forums/showthread.php?t=1200)