Friday, February 26, 2010

Sutter and Doctors Groups Prosper

SAN LEANDRO HOSPITALWhen it comes to framing the San Leandro Hospital situation as a populist issue--pitting regular folks at odds with a billion dollar corporations--cobbling doctors with nurses and residents against Sutter has always been uncomfortable. Kind of like feeling sorry for Lehman Brothers because they weren't big enough to be saved by the Treasury. It's the well-off hobnobbing with the common man in a fight against The Man.

A study reported in the health policy magazine, Health Affairs, says profligate insurance companies are not only to blame for the nation's need for health reform, but hospital providers and doctor's groups are also profitting from the situation.

Hospital fees rose over 10 percent from 1999-2005, according to the study as more facilities were consolidated among fewer corporations. The report, in addition, to stories in BusinessWeek and the Wall Street Journal, singles out Sutter Health, the provider which runs 24 hospitals in the state, including Eden Medical Center and San Leandro Hospital, and Catholic Healthcare West, which operates 39. Both are able to leverage higher rates from insurance companies because of their size. It also says Sutter negotiates with five hospitals within the U.C. system.

Conversely, Southern California hospital provider, Prime Health, is widely known and vilified for gobbling up bankrupt hospitals in new markets, quickly canceling existing contracts with insurance companies and renegotiating for steeper fees. With the District's recent legal moves this week, the possibility of Prime re-entering the discussion about San Leandro Hospital is increased and may emerge as a possible endgame. Sort of like replacing a philandering husband with Tiger Woods.

According to BusinessWeek, a ploy to stifle supply at hospitals increased higher fees for hospitals. Sutter's $300 million rebuild of Eden Medical Center features a notable reduction in beds than the original despite a need for a larger number of rooms in Alameda County. The report fleshes out what this means to provider's bottom line.
Hospital-bed capacity declined and the physician workforce failed to grow enough to cover demand, a tightening that also enhanced provider market power, according to the report. State regulations also limited the ability of insurance companies to restrict customers’ access to doctors and hospitals.
To combat the rise of fewer, more powerful health providers, especially in Northern California, the report says many prominent doctors began to form medical groups starting in the mid-1990s. They now, according to the report, command "double-digit" fees further straining the system.

Many critics of the Eden Township Heatlhcare District's attempts to fight Sutter over, among other things, the alleged unprofitability of San Leandro Hospital, say the facility loses unknown amounts of revenue from doctor's groups who allegedly "outsource" procedures and diagnostic tests to clinics outside of the hospital. Former Eden Medical Center Chief of Staff Dr. Miles Adler and current Eden Township Healthcare District Director Dr. Vin Sawhney have both been accused of this action by supporters of Sutter.

While the community focuses on saving lives by keeping San Leandro Hospital open, others may be more keen on saving dollars and cents.
JOIN THE REVOLUTION! for more news, go to twitter.com/eastbaycitizen


  1. This is an interesting and provocative article. Up to this point, health insurers and pharmaceutical companies have been labeled the prime villains in the current, wholly broken market of health care. This study helps us gain understanding that providers such as massive hospital and physician groups are taking large profits as well. Additional information tells us that medical equipment and medical supply companies are also consolidating and sucking money out of our economy.

    When a large part of the economy rockets forward, year after year, with growth in costs two to three times the rate of inflation, it makes sense that there are many players creating that outcome. The health care industry remains highly profitable while most of the rest of the economy is truly suffering. This is unsustainable, and it is why in order to create jobs and repair the structural budget defcit, meaningful health care reform must be achieved.

    The right-wing memo that "health care reform should be set aside in order to tackle jobs and the defcit" is exactly wrong. The health care "market" has destroyed jobs for Americans in manufacturing and other important industries. Medicare and Medicaid are large and growing portions of Federal expenditures which, along with long-term tax cuts for the extraordinarily wealthy, are prime drivers of the expanding defcit.

    Meaningful health care reform will not be provided by freeing up insurers to sell "products" across state lines, implementing Federal tort reform, and then calling it a day; that argument lacks integrity. The same Republicans who hammer away at the need to create caps on lawsuit damages, no matter how grieveously a patient was injured by their provider, would fight to the end to prevent price caps and rate-setting for those same medical providers. The linked Health Affairs study not only recommends these limits, but makes a good case in explaining that without caps and rate-setting, health care reform will be extremely limited in its effectiveness.

    Their is little integrity to the arguments Republicans are making in the health care debate. For reform proposals they dislike, such as a public option, they claim that a one-size-fits-all solution is improper, and that individual states should have more control. However, in the areas of tort reform and allowing insurers to sell across state lines, all of a sudden one-size-fits-all is neccessary.

    California, Texas, and many other states already have caps on lawsuit damages and other elements of tort reform. Over the decades our State has had tort reform, has the rise in health care costs been less in California than in other states? Absolutely not.

    The idea that selling insurance across state lines is a panacea is also ridiculous. California has a decently regulated health care insurance market, but even here insurers are able to sell "junk insurance", with lower premium costs but much, much higher deductibles, co-pays and other service fees. The premiums may be lower, but if you actually have to use health care, the costs are much higher. It's sickening and deceptive.

    Federal laws were passed within the last decade which freed credit care companies to have greater ability to sell across state lines. Did this "increased competition" give us better credit deals? No, exactly the opposite. Almost all credit providers now headquarter themselves in the same three or four states- the states with the most lax regulations on credit standards. Along with relaxed Federal regulations, this is why people can now find their credit interest rates rocket from 0% to 9% to 30% for little reason at all. Allowing health insurers to do the same would cause similar results; all health insurers would sell from states where they are allowed to treat their customers poorly.

  2. The evidence shows that the elimination of Acute Care beds at San Leandro Hospital would devastate access to care in our Healthcare District for the next generation or longer. However, I believe it overstates the case a bit to say that there is "a need for a larger number of rooms in Alameda County" than we currently have.

    A recent analysis showed that acute care hospitals in our County operate with an average census of around 65% of their capacity. It is wise to keep a meaningful surplus capacity on an average basis, as bed occupancy typically rises simultaneously at all hospitals at a time of flu or other community illness; often this rise is dramatic. However, technological advances in health care are continual, and these advances will continue to reduce the need for some acute care services.

    When our mothers delivered us in the hospital, both of us usually had hospital stays of 5-7 days. Now, those stays are often 1-3 days. Surgeries which routinely had stays of more than three days can now be performed with scopes and other limited interventions, allowing the patient to go home the same day and not take up an overnight bed at all. Advances will continue in many areas, further reducing the need for Inpatient services.

    However, these improvements will never eliminate the need for Acute Care beds, in the same way that making community clinics and Urgent Care facilities more avaliable, and marketing them better, will not eliminate the need for Emergency Rooms in our communities. A countervailing force in these trends will be that the community will age as we become even better at treating illnesses and conditions. An aging community will need more care, including Acute services like ER's and ICU's.

    The case we're making with the need to maintain Acute Care at SLH is this: The rebuild plans by Sutter in Castro Valley reduces Inpatient beds from the current 178 to 130. The announced rebuild plans at the County's Highland Hospital will reduce Inpatient beds from about 265 to 165. If all of the 122 Acute beds at SLH are eliminated, we will have lost about 270 beds from just these three hospitals, all within a 20-mile radius in North and Central Alameda County. In addition, we would lose an Emergency Room. This would all happen by the year 2013.

    We also have the spectre of Sutter's rebuild plans at the three Acute Care campuses of Alta Bates Summitt in Oakland and Berkeley. The initial rumblings have Sutter eliminating one of those campuses completely. Given our experience with Sutter throughout the Bay Counties, we can expect Sutter to try to cut a large number of beds there as well.

    Close observers would concede that it is possible to reduce Acute Care beds in Alameda County and still maintain a responsible medical system which can handle peak illness periods or the large earthquake which is extremly likely to take place within the next 50 years. However, Sutter and the County need to ensure that beds and services are reduced responsibly. The closure of all SLH acute care services would be irresponsible.