Health Policy - New York State

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May 28, 2004


Steven Davidson

So, I both pay taxes and depend upon the largesse of Medicaid (in part) to enable that payment. I get the policy disconnect, but fear the "structural program reform" absent maintenance of hospital revenues. I just don't get the apparent lack of concern with hospital stability. Not that Medicaid should pay the full freight, but in the ER, we earn $17 for a Medicaid patient regardless of what we do for the patient. It costs $12 in malpractice insurance (Kings) and ~$7-8 in billing and collection costs to collect that $17. The hospital does a bit better and so can back subsidize my physician staff, but for how long?



It may be paradoxical, but I'm quite concerned about hospital stability ... for individual hospitals. The problem is one of all hospitals in New York. In system terms, this is a problem of "sub-optimization" (optimizing the outcome for a subsystem leading to less than optimal outcomes for the system as a whole. This often collapses into a "tragedy of the commons" or exhaustion of shared resources that are seemingly free or priced below cost to each individual or individual sub-systems).

This is compounded by a repeating cycle in NYS hospital policy.

In New York we hospitalize people more often and keep them longer and spend more in the aggregate. In return for this, we do not get better outcomes, better access or higher patient satisfaction than elsewhere (see the work of Elliott Fisher, MD among others).

Hospitals in NY have been financially strapped for 30 years and repeatedly the policy prescription has been to try to keep all of them alive, primarily in response to political activity and primarily by throwing money at them. After 30 years one would think that we would have learned and changed our behavior. Well, most will admit the problem in private, but we keep behaving the same way.

As an ER manager, you're probably quite sensitive to the number uninsured patients and sensitive to their personal plight. Underneath it all is this raw economic fact: most people are uninsured because coverage is too expensive for them, their employer or the taxpayer. That's why we have over 3 million uninsured New Yorkers compared to 1.5 million 25 years ago. And, in large part, insurance and Medicaid costs are higher than these people can afford because of the aggregate costs of hospital care.

I'm convinced by the way that over time, this pattern of relying on politics for short-term fixes has biased Board and senior management decision making processes and criteria. More attention is paid to wielding political influence than operational and clinical improvements. There's some evidence that this pattern emerges in all regulated systems.

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