Skip to comments.Doubts About Whether Shutdowns Equal Savings (closing hospitals)
Posted on 04/10/2005 10:53:51 PM PDT by neverdem
Will closing hospitals actually save taxpayers any money?
That is clearly the goal of state officials, who are under enormous pressure to cut spending on Medicaid, the health care program for the poor, and who see unnecessary hospital beds as a good place to start. Gov. George E. Pataki recently said that closings would be a significant part of his plan to cut billions from Medicaid in the coming years.
But even advocates of closings say there are questions about the long-term savings, noting that any real reduction in expenses might be many years away. And some people who study hospital economics question whether shrinking the industry will lower health care expenses at all.
"The cost savings argument is to be taken with a grain of salt," said James R. Tallon Jr., the president of United Hospital Fund, a policy group based in Manhattan. "And the linkage to Medicaid is, at best, a tangential linkage."
Hospitals in New York are in terrible economic shape, and there is broad agreement that if some of them close, the remaining ones will gain business. But skeptics say it might not lower the cost per patient, for Medicaid or any other payer.
"The real savings is in hospitals becoming more efficient, and merely closing hospitals doesn't accomplish that," said Steven Malanga, a senior fellow at the Manhattan Institute.
Closing hospitals can take enormous costs out of the health care system in labor, real estate, maintenance and equipment, and can save money for private hospital corporations. But it is also expensive in the short run, involving settling the hospitals' long-term debts and converting buildings to other uses. That is why the state has asked for $1.5 billion in federal aid to help New York's hospitals weather a period of contraction - a sort of down payment on future returns.
"You have to invest money to save money," said Kenneth E. Raske, the president of the Greater New York Hospital Association.
If consolidation revives hospital finances, Mr. Raske and state officials say, that would make money available to invest in computer systems to improve efficiency and patient care, and disease management programs to improve treatment of people with chronic ailments like diabetes. The experience around the country has been that such efforts, if handled well, can lower health care costs. But again, they involve large up-front costs for gains that take years to turn up.
Paradoxically, in the near future, closing hospitals could drive the cost of inpatient care up, a point that state and hospital officials and other experts concede.
Hospitals have been battered by health maintenance organizations pushing down prices. With fewer hospitals, the prevailing logic goes, those that remain would be in a stronger negotiating position with H.M.O.'s - in other words, they could charge more.
What a hoot. The government and now the private insurance industry both tell the hospitals what they will pay, and the hospitals have to make do on that.
Go ahead close all the hospitals you like. As long as you don't pay hospitals what it costs to service patients, more will close.
By the time our government figures it out, you'll have two year waiting periods for all but open heart surgery, and even then they'll put it off for months if they can.
Hospitals are getting screwed, and you're next.
Who pays for the illegal alien bills? The government? Surely you jest...
I don't jest, and quit calling me Shirley.
Still, seems to me if you close hospitals, the result will be more private clinics. And the more private medical offices there are, the less of this crap with illegals stacking up in the waiting room occurs. And frankly, I never liked hospitals much anyway. Private clinics are generally smaller, more personal, less likely to have annoyed doctors, and in your neighborhood instead of in the middle of the city's nasty ones.
Don't worry, they will get around to making them illegal.
Hell, everything else is already, why not private clinics? Good point.
Actually, private specialty hospitals and clinics are already illegal, but they are functioning under a Congressional exception to the law which expires in 2006.
There is an intense battle going on in Congress and on K Street right now over this, but the big money (and thus the Congress) is on the side of a ban.
I wouod appreciate a bit more background on why they are illegal and the exception they are operating under.
When government screws up one part of the natural balance of supply and demand, then it must constantly re-adjust every other part of the process to prevent "unfair" competition.
Eventually we have a rube-goldberg monstrosity. At every step when government regulatin makes it worse, the demand is for more government regulation.
Fixed costs go down, incremental costs go up. Someone will have to count the beans to see what happens.
Ireland closed a bunch of hospitals and achieved large savings.