The Sickly State of Public Hospitals


There are many types of hospitals but the most well-known are the Public Hospitals. What sets them apart is that they provide services to the indigent (people without means) and to minorities. public news usa

Historically, public hospitals started as correction and welfare centers. They were poorhouses run by the church and attached to medical schools. A full cycle ensued: communities established their own hospitals which were later taken over by regional authorities and governments – only to be returned to the management of communities nowadays. Between 1978 and 1995 a 25% decline ensued in the number of public hospitals and those remaining were transformed to small, rural facilities.

In the USA, less than one third of the hospitals are in cities and only 15% had more than 200 beds. The 100 largest hospitals averaged 581 beds.

A debate rages in the West: should healthcare be completely privatized – or should a segment of it be left in public hands? cbd publicity

Public hospitals are in dire financial straits. 65% of the patients do not pay for medical services received by them. The public hospitals have a legal obligation to treat all. Some patients are insured by national medical insurance plans (such as Medicare/Medicaid in the USA, flower boosters NHS in Britain). Others are insured by community plans.

The other problem is that this kind of patients consumes less or non profitable services. The service mix is flawed: trauma care, drugs, HIV and obstetrics treatments are prevalent – long, patently loss making services.

The more lucrative ones are tackled by private healthcare providers: hi tech and specialized services (cardiac surgery, diagnostic imagery).

Public hospitals are forced to provide “culturally competent care”: social services, child welfare. These are money losing operations from which private facilities can abstain. Based on research, we can safely say that private, for profit hospitals, discriminate against publicly insured patients. They prefer young, growing, online ammunition store families and healthier patients. The latter gravitate out of the public system, leaving it to become an enclave of poor, chronically sick patients.

This, in turn, makes it difficult for the public system to attract human and financial resources. It is becoming more and more destitute.

Poor people are poor voters and they make for very little political power.

Public hospitals operate in an hostile environment: budget reductions, the rapid proliferation of competing healthcare alternatives with a much better image and the fashion of privatization (even of safety net institutions).

Public hospitals are heavily dependent on state funding. Governments foot the bulk of the healthcare bill. Public and private healthcare providers pursue this money. In the USA, potential consumers organized themselves in Healthcare Maintenance Organizations (HMOs). The HMO negotiates with providers (=hospitals, clinics, pharmacies) to obtain volume discounts and the best rates through negotiations. Public hospitals – underfunded as they are – are not in the position to offer them what they want. So, they lose patients to private hospitals.

But public hospitals are also to blame for their situation.

They have not implemented standards of accountability. They make no routine statistical measurements of their effectiveness and productivity: wait times, financial reporting and the extent of network development. As even governments are transformed from “dumb providers” to “smart purchasers”, public hospitals must reconfigure, change ownership (privatize, lease their facilities long term), or perish. Currently, these institutions are (often unjustly) charged with faulty financial management (the fees charged for their services are unrealistically low), substandard, inefficient care, heavy labour unionization, bloated bureaucracy and no incentives to improve performance and productivity. No wonder there is talk about abolishing the “brick and mortar” infrastructure (=closing the public hospitals) and replacing it with a virtual one (=geographically portable medical insurance).

To be sure, there are counterarguments:

The private sector is unwilling and unable to absorb the load of patients of the public sector. It is not legally obligated to do so and the marketing arms of the various HMOs are interested mainly in the healthiest patients.

These discriminatory practices wreaked havoc and chaos (not to mention corruption and irregularities) on the communities that phased out the public hospitals – and phased in the private ones.

True enough, governments perform poorly as cost conscious purchasers of medical services. It is also true that they lack the resources to reach a substantial segment of the uninsured (through subsidized expansions of insurance plans).

40,000,000 people in the USA have no medical insurance – and a million more are added annually. But, there is no data to support the contention that public hospitals provide inferior care at a higher cost – and, indisputably, they possess unique experience in caring for low income populations (both medically and socially).

So, in the absence of facts, the arguments really boil down to philosophy. Is healthcare a fundamental human right – or is it a commodity to be subjected to the invisible hand of the marketplace? Should prices serve as the mechanism of optimal allocation of healthcare resources – or are there other, less quantifiable, parameters to consider?

Whatever the philosophical predilection, a reform is a must. It should include the following elements:

Public hospitals should be governed by healthcare management experts who will emphasize clinical and fiscal considerations over political ones. This should be coupled with the vesting of authority with hospitals, taking it back from local government. Hospitals could be organized as (public benefit) corporations with enhanced autonomy to avoid today’s debilitating dual effects: politics and bureaucracy. They could organize themselves as Not for Profit Organizations with independent, self perpetuating boards of directors.

 


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