Human Exceptionalism

Free Market Solution to Public Hospital Crisis in NYC?

This is an interesting how-do-you-do.  A crisis in the emergency care for the poor may be heading for a free market solution.  From the NYT story:

Only a few private hospitals have survived in neighborhoods like Bedford-Stuyvesant, Brownsville and Bushwick to serve poor patients like them. Now all are in such dire financial shape that a small group of veteran health care planners appointed by Gov. Andrew M. Cuomo is debating last-ditch measures to save them.  For decades, the fallback solution in American cities has been to close such hospitals.       

But one of the actions being considered by the group may be even more radical: expunge the hospitals’ debt of more than $1 billion, partly at taxpayer expense, and then let large for-profit companies take over the facilities and restructure patients’ care. Experts say what ultimately becomes of the hospitals could make them a model, or a disastrous experiment, in the delivery of health care to the poor.       

Wow.  As readers of SHS know, I have become an opponent of single payer precisely because global budgets in difficult economic times lead to terrible cutbacks in care–reductions that would never be tolerated by private sector companies.  That scenario is apparently playing out in Brooklyn:

Questions about mismanagement hang over some of these institutions, but analysts agree on the basic problem: Most of their patients rely on Medicaid, the government insurance program for the needy, which has been repeatedly cut as eligibility expanded. There is no confidence that the national health care overhaul will help. Indeed, federal cuts expected through 2013 will disproportionately hurt the same hospitals. In neighborhoods with mainly black and Latino residents, in a borough of 2.5 million where more than one in five residents live below the poverty line and two in five receive Medicaid, the five endangered hospitals account for 83,000 admissions, 325,000 emergency room visits and 760,000 clinic visits a year.       

Private sector tends to be more efficient and better managed than public sector.  Private sector is more likely to be kept in line by regulators than if the same thing is done by government, who employ the regulators:

Steven Moore, an executive with PricewaterhouseCoopers, the consultants invited by Mr. Berger to sketch out this proposal, likened Brooklyn’s indebted hospitals to banks with toxic assets, and suggested a bailout first. “Our premise is you have to design a system that will attract private capital,” Mr. Moore said. “Private capital is more efficient, it demands productivity, it demands creativity, it demands innovation.”       

It also demands profits. Many experts doubted the proposal’s contention that 20 percent to 30 percent waste could be safely carved from Medicaid spending in Brooklyn to yield a reliable return of about 7 percent. At the Greater New York Hospital Association, the lobbying group for hospitals, board members worried about people without insurance, particularly the city’s many illegal immigrants. Getting rid of toxic assets — hospitals’ debt — would not solve the problem of patient mix and revenue, said Kathleen Shure, an association executive, and “the board fears that it will end up in for-profit entities getting rid of ‘toxic populations.’ ” Mr. Berger, an investment banker and veteran of health commissions, is impatient with such objections. “Health care is not hospitals,” he said. “Health care is an integrated system, a network,” one that requires new patterns of investment.       

I believe that private sector health care and competition may offer our best bet to control health care costs without unduly impacting quality of care.  It will be interesting to see if NY chooses this path to maintaining health care in these affected burroughs.  If so–and if it works, a big if–it could become the model for the country.

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