Print| « Previous | Next » |
Tuesday, January 26, 2010
Understanding the Cost of Health Care in New Hampshire
By Bruce King, CEO & President, New London Hospital
I am pleased to have the opportunity to comment on behalf of the New Hampshire health care provider community on the ongoing dialogue over reforming the health care delivery and financing systems. By way of background I have spent more than 30 years in my career in various roles of health care Administrative and Finance.*
My view of New Hampshire providers and the outlook for the continued delivery of high quality, cost-effective healthc are to its citizens is quite positive. At a global macro assessment, New Hampshire hospitals are performing quite well. Our scores from the Centers for Medicare and Medicaid Services (CMS) are regularly near the highest in the country for Medicare recipients. In addition, hospital leaders, in collaboration with the Foundation for Healthy Communities, have taken the lead on statewide initiatives including hand hygiene, the reduction of central line bloodstream infections, and the adoption of a patient safety checklist.
A review of the New Hampshire health care cost per capita (per the latest Kaiser nationwide study) reveals that we are, in fact, the lowest of all the New England states. Our hospitals have made significant advances in the adoption of electronic medical records and provide substantial economic and employment benefits. We rank as the third highest industry category for jobs provided and the second highest industry in the state for average annual wages. New Hampshire hospitals have a substantial and positive impact on both the state and local economies.
The New Hampshire Hospital Association (NHHA) recently produced a summary compilation of the 2008 financial results for all New Hampshire acute care hospital systems. The total operating margin of all hospitals was only 2.4%, which is well below both national and capital market expectation and averages. Included in this number was the fact that NH hospitals wrote off $357 million in charity care and bad debt, or roughly 5.2% of our total revenue stream.
Why then do we hear about the “cost” of New Hampshire healthcare premiums so frequently? There are multiple factors, which should be more thoroughly explored and understood when assessing New Hampshire premium performance. These include the impact of 1) cost-shift, 2) for-profit health plans, and 3) pharmaceutical cost.
A major contributor to the employer portion of the cost of health care premiums is the so-called “cost shift” impact. This occurs due to the significant underpayment of providers by the state Medicaid program when compared with the actual costs of services provided to patients. The Center for Public Policy Studies report in September 2008 estimates that the impact of this “cost shift” is greater than $400M of subsidy annually, or roughly 17% of the total employer premium cost.
Another area worth noting is the amount of money that leaves the State and our health care system annually and goes to Wall Street, due to the existence of for-profit health plans operating in New Hampshire. Insurance plans such as Anthem and Cigna require significant operating profit margins and fund a large portion of this from the premium dollars charged to employers.
Lastly, it is important to understand and calculate the impact of pharmaceutical drug costs and profits on the cost of providing health care. For many employers, the actual cost of a prescription drug benefit now exceeds the cost of actual inpatient care in regards to percentage of premium.
Efforts to redesign payments will require greater integration of hospitals, doctors, and other providers, and will result in the assumption of greater risk for those providers, as well as increased accountability for the outcome of the care provided. These new payment models will lead to the creation of new healthcare delivery systems—systems comprised of hospitals, doctors, and other providers along the full continuum of care, from primary and preventive services, to acute, post acute, and rehabilitative services.
Hospitals support efforts to work collaboratively with payers, providers and others, to build and pilot new payment and delivery system models. It’s why I have been such an active participant over the past year in the Citizens Health Initiative payment reform group. As we work to reform healthcare nationally and locally, we must find ways to work together to build lasting solutions to the challenges we face. Our patients, their families, and the communities we serve are counting on us.
* Bruce King worked for 3 years in the Massachusetts Mental Health system, 3 years in a Boston teaching hospital, 5+ years in Boston with a big 8 accounting firm (KPMG), 17 years at DHMC in Finance and Network Development, and the last 6 years as President and CEO of New London Hospital. He is also currently serving as the Chair of the NH Hospital Association board (NHHA), Treasurer of the State of NH high risk pool, and an active participant in the Citizens Health Initiative payment reform group.
Tags: accountability, Citizens Health Initiative, NH Health Care, payment models, Payment Refrom
Wall Street reform is going to fail for the same reason that health care reform was eviscerated. An obstructionist Republican Party that is voting as a bloc in order to cause the failure of the Obama presidency. Nothing that Obama supports is going to pass.
Barack Obama in addition to the remainder of his progressive cronies should really be embarrassed with them selves. Furthermore this is a total outrage. I seemed to be under the idea that once the president will take office he has to swear an oath to uphold as well as protect the constitution of our great country. Nowhere in the Constitution does it afford the government the right to enact as well as implement laws and regulations such as the medical reform bill. There’s no doubt that that these power mongers shall be in for a total surprise in November. Congratulations at the collapse of your political future.