Some Common Sense on Health Care

I went to a public forum on health care last week. There were representatives of five groups: Republican, Democrat, "Tea Party Patriot" (tends libertarian), Health Care for All (advocates single-payer) and the Chief Financial Officer of our local hospital. The forum was well-moderated by Paul Hurley, the op-ed editor of our local paper, the Visalia Times-Delta, the participants were mannerly and the audience of over 200 was well-behaved. It was quite a relief not to be subjected to some of the boorish behavior we have all seen on the news lately.

I want to focus on the remarks of the hospital CFO. They are particularly telling to me because it was rather predictable what the others were all going to say. I couldn't tell what to expect from him. Gary Herbst had quite a few interesting things to say from the perspective of the provider. Keep in mind that our hospital, Kaweah Delta Hospital (KDH), is a non-profit with a board elected by the community. Its take on things thus has more weight to me than an operation motivated largely by profit. Kaweah Delta wants to make enough to stay in business and provide the services the people of the community need. Visalia is a city of about 125,000 in Central California, an area that is primarily rural. By volume of farm sales, for instance, Tulare County is typically number two in the nation, right behind neighboring Fresno County.

Gary started out by saying how much in agreement he and the hospital are with most facets of what President Obama's plan and HR 3200 want to do. He described KDH as "non-profit and pro-reform." They agree with the industry working to save $155 billion over ten years. They like the bill's expansion of primary care physicians and nurses and increasing the supply of physicians in general. He likes the expansion of "community-based health and prevention" efforts. He feels private insurance definitely needs competition and must be prevented from dropping people who get sick. He agrees care providers should not get paid again for "readmissions and errors," says the current system impedes doctor-hospital cooperation by inserting insurance questions into the middle of everything, and very much likes the prospect of a standardized system of notification and billing. He says it will save big money. A large operation like Kaweah Delta employs a lot of people who have to spend too much time dealing with all the various requirements of a myriad of insurers. He and KDH are in favor of the "public option."

He is concerned primarily with two things: that the cost of insuring everyone regardless of pre-existing conditions is accurately assessed and that the "reimbursements" paid to institutions such as his are realistic. He believes that the bill would lower reimbursements to the medicare level. That is a concern because of the statistics he presented. He said that 70% of their business in Medicare or Medical. They lose $10 million a year on Medicare patients, who constitute 47% of their admissions. 20% of KDH patients have private insurance, on which the hospital made a "profit" of $20 million. That allowed it to operate in the black by $9 million last year and add some modern equipment. If everything is reduced to the Medicare level, he fears KDH will not be able to make it. As he says, "I support reform and the public option, but it must reimburse real costs.

So that is the take of the business manager of a non-profit hospital. If some of the other savings he foresees materialize as Gary expects, that may mitigate the reimbursement levels currently contemplated. But if not, they would be a good way for the foes of reform to scuttle the reform effort. It is certainly essential that all Americans are covered so they can go to the doctor when they are ill, and that rising costs are contained before they, like the housing bubble, crash and disastrously affect the economy. In the meantime, of course, it is necessary that congress take realistic figures into account about what things will actually cost and how much will be needed to keep the system running.

I left pleased at the acceptance this non-profit hospital executive had of the need for reform and his confidence in most of the measures proposed for accomplishing it. It seemed to assure, from one who would be entrusted with carrying it out, that if amassing large profits was not your primary goal you could operate the system sensibly in the manner being contemplated by the reformers.