Money makes the industry go `round?
January 17th, 2008 by moniesRecently I drove through the Las Colinas district near Dallas, whizzing by mile after mile of manicured grass. Part of the city of Irving, Las Colinas began as an ambitious development in the early 1980s — originally envisioned as a grandiose project with monorails and canals.
Those dreams disappeared after the oil bust. But developers still managed to lure luxury hotels and businesses (Oprah favorite Phil McGraw keeps his offices in the district). Today, Las Colinas stands as a crme de la crme collection of shining office buildings, gated communities, boutique shops, exclusive golf clubs, hotel towers and haute-cuisine restaurants — even boasting a movie soundstage and its own symphony orchestra.
One might consider it the Palm Beach of Dallas.
As I motored through the district, I happened to pass by a large building bearing the Baylor Health System logo.
The sign on the front indicated it was an outpatient surgical facility that included requisite urgent care and 24-hour obstetrics offerings.
But the sign meant that this large, impressive building offered no inpatient services. Consider it the post-modernization of health care.
The experience caused me to think of the construction of Integris Health’s new hospital in Yukon, which has a heavy emphasis on outpatient care. I was struck by how far the health care industry has evolved from the early part of my career.
At that point, in the `70s and `80s, outpatient care in a hospital was pretty much an afterthought. After planning for development of inpatient services, if there was money left over, health care organizations might include some outpatient services.
In this era, we might now ask what would drive such a remarkable change in a relatively short period of time.
The answer is deceptively simple. One of my old health care administration professors used to instruct his students plainly, “Remember, form follows prepayment.”
By this he meant that all facilities and services would be developed where there are established insurance payments to cover care. When I began my career in health care administration in the early `70s, insurance was inpatient oriented.
In fact, I remember patients having their molars removed, then staying two or three days in a hospital. If hospitals and doctors were going to get insurance companies to pay, care had to be delivered in an inpatient setting. During the same era, psychiatric and drug rehabilitation facilities flourished. Then government reimbursement dried up, and many of these facilities disappeared.
But money isn’t the only driving force for change. Tuberculosis sanitariums used to dot the nation. Science conquered tuberculosis, and these sanitariums no longer exist. So our evolving health care system responds to a combination of financial and technological pressures.
I suspect insurance companies’ motive for the inpatient model was the theory that insurance should only pay for the most serious of problems. And because the insurance companies focused on inpatient care, the medical system often convinced itself that everything had to be treated as an inpatient problem, no matter the lack of risk or severity.
This system worked because inpatient care was far less expensive at the time. Now, some three decades later, the reverse is true. Unless a patient is seriously ill, insurance companies won’t pay for inpatient stays. Because of my professor’s truism, the design of our national health care system has subtly shifted to meet these new forms of insurance payments.
Procedures are now routinely performed in doctors’ offices that at one time would never have been done (minor surgery or chemotherapy, for example) because they were viewed as too risky or because they wouldn’t be reimbursed properly.
Certainly we’ve learned how to manage risk better.
But insurance companies have figured out that care can be delivered cheaper and more effectively in outpatient settings. Health care systems like Baylor in Dallas have discovered a large portion of their revenues will be outpatient, so they’re building facilities that are completely outpatient-driven, with no inpatient support.
Even mentioning this kind of facility 20 years ago would have been considered ridiculous.
If the health care system has responded to changes in reimbursement, can we predict equally dramatic changes in the next few decades? I suspect the truism will hold.
I predict we’ll see hospitals almost totally focused on the most acute cases, patients experiencing major trauma, such as burn victims or those needing organ transplants.
As science becomes more refined, insurance companies will recognize this trend. And it will become even less attractive for providers and patients alike to consider hospitalization for what we consider today to be serious medical conditions.
Author: Stanley Hupfeld
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