I live and work in a small town (population 10,000). I’ve been in the same home for 22 years. In that time, I have seen only three primary health providers. One was at our Community Health Clinic, one was at a big Health Maintenance Organization (HMO) and my current PCP belongs to a family practice that has ties to our local hospital. I also happen to live close by to three major medical centers. When I say close by, I mean within an hour or two of where I live. But I am lucky enough to have a small hospital in my hometown, just three miles away from my house. That brings quite a bit of reassurance with it, since I am getting older and I have personal health issues that need attention.
Small hospitals, however, are going the way of the dinosaur. It just costs too much to keep them open! Our small hospital has a long and storied history in our community. Back in the early 1920’s, a local physician got some friends to open their home and the hospital officially opened with two beds for women giving birth. Twenty years later, the hospital had grown into a 21-bed facility.
California passed a law in 1945 allowing district hospitals to levy taxes. This made financing the hospital much easier and more predictable. The whole town shared in the costs rather than just relying solely on the patient. Our town quickly got on the bandwagon and elected a board and formed a hospital district.
In the early 1950s, as the town expanded, a new location for the hospital was sought. Through the largesse of one of the leading citizens, land was donated and building began on what we now have, albeit in an updated and modernized facility. Original cost estimate for that 1952 hospital that had 35 beds and every modern convenience was $400,000. But even back then, local tax payers were reluctant to fund health care. It took a lot of hand-shaking, back slapping, luncheons, dinners, and special events to convince residents that their money would be well spent. And in 1957 doors opened and folks began receiving care.
Here we are today. We have expenses of over $44 million and losses of over $3 million. Because we are running at deficit, our current Board has decided to close some services. These include obstetrics and gynecology, our Women’s Birth Center, the hospital’s skilled nursing facility, and selling off our in-home care service. At a recent public meeting, proponents for keeping these services open made eloquent and impassioned arguments, but the bottom line is that our community no longer supports or perhaps even needs our hospital. It is a matter of convenience that is too expensive to sustain. And it is just a matter of time before the hospital will close down completely.
Our community is not the only one to experience this dilemma. What used to be an essential service is now an expensive add-on. Many people in my community have access to different kinds of medical care and can go to other hospitals. But there are a good number of folks who would prefer to be able to get their care here. It comes down to how much they are willing to pay for the convenience.
This is where things get very complicated and difficult. You would think you could just look up what it would cost to take out tonsils, come up with a price and then at 10% to cover the costs of the extras and be done with it. But fact of the matter is, there is no single price. Getting your tonsils out at my hospital will cost less than some hospitals, and be more expensive at others. Prices for the surgeon, the anesthesiologist, medications, lights, the nursing staff, support staff, and the housecleaning staff all have their own formulas for calculating fees and costs. Insurance companies may pay some, all, or none of the costs involved. And if it is not covered by insurance, then it will come out of your pocket or some other source.
It is an amazingly inefficient and cumbersome way to do business.
Here is the thing. I am not sure medicine, hospitals and doctors should be considered a “business” in the traditional sense. We need a hybrid way of looking at what it means to be healthy and how healing is achieved physically and fiscally. Here are some specifics for discussion:
| Current Model | Proposed (Pie-in-the-Sky) Possibility |
| Procedure-based costing (think restaurant menu) | Outcomes-based costing (e.g., if you stay healthy, your doctor gets paid) |
| Single point of authorization (physician orders, insurance authorization) | Collaborative decision making between licensed care provider and consumer (e.g., no more doc-shopping, no insurance company limitations) |
| Responsive/reactive interventions (treat whatever comes up) | Prevention-based interventions (e.g., lifestyle choices and consequences are incorporated into treatment plan including nutrition, diet, exercise, and stress management) |
| Evidence-based guidelines/algorithm treatment plans (e.g., everybody with BP over 140/70 gets prescribed blood pressure medication) | Evidence-based guidelines supported by individual outcomes (e.g., intersection between prevalence rates and individual variability) |
| Specialty practices that operate independently (e.g., family practice refers to neurology, ENT, OB/GYN, cancer specialists) | Collaborative practices that include specialties based on community need (e.g., Kaiser model) |
| Patient does not share responsibility for health outcome (think malpractice claims) | Patient and provider share responsibility for health outcome (i.e., if I continue to smoke, I may need surgery, so I should be contributing to the cost of my care because of the decision I made) |
| Fee for service structure determined by CMS, AMA, insurance companies, and elected officials | Fee structure adjusted for cost of living, geographic area and incentives based on variability of demand and price (e.g., gas prices) |
What I am trying to do here is point out that we need to radically change how we look at the delivery of medical services across the continuum of care. We need to change the relationship between the provider and the patient. We need to re-examine the cost of providing services to individuals. We need to look at what we really value and what we are willing to pay for. We need to look at a financing system that provides adequate income for providers, doesn’t put the patient into the poor house, and incentivizes being healthy.
I will go out on a very short limb and predict that my small town hospital will be closing its doors in the next five years. Citizens will complain and protest, but will adjust to the newer (and more financially viable) model of an urgent care facility that can stabilize patients and get them sent off to one of the nearby trauma centers and can provide the day-to-day services (X-rays, mammograms, EKG tests) so that folks won’t be clogging up emergency rooms. We won’t be able to compete with the high-end specialty practice groups because we just don’t have demand for those services.
Mind you, I am not an economist, and there are probably lots of holes that need filling in these proposals. What I am doing here is starting a conversation. Medicine is changing. Services are changing. If you want a say in the matter, it’s time to speak up!
To learn more about this topic, check out:
http://www.who.int/bulletin/archives/80(2)143.pdf
https://wire.ama-assn.org/ama-news/want-see-economic-impact-doctor-visit-small-town
http://www.healthcarebusinesstech.com/rural-hospital-finance/
