Hospitals are caught in the crossfire of a worldwide debate.
Should healthcare be completely privatized - or should a segment
of it be left in public hands? As the debate infects countries adhering
to the "social model of capitalism" (e.g., Scandinavia and France) and
spreads to countries in transition in Central and Eastern Europe -it is
worthwhile to study the experience of the bellwether in privatized health
care: the USA.
The Sickly State
by Sam Vaknin
Author of "Malignant Self Love - Narcissism Revisited"
|Of the many mutations of the hospital, most people experience the Public Hospital. These are all-purpose, universal, and all-pervasive (inpatient and outpatient) institutions, which service even the indigent, criminals, illegal aliens, and members of the minorities.|
Public hospitals are the descendents of almshouses, poorhouses, correction facilities, and welfare centers. Like other modern fixtures - the university, the school, the orphanage - most hospitals were originally run by the church and included a medical school.
|Later on, local communities established their own hospitals. As the functions (and area) of these initially modest facilities expanded, hospitals were gradually taken over by regional authorities and state governments. Federal funding for hospitals - in the form of Medicaid and Medicare - is relatively new and dates back only to LBJ's (President Lyndon B. Johnson) Big Society in 1965.|
Hospitals are now reverting to communal management. Bruce Siegel, President and CEO of Tampa General Hospital, notes in "Public Hospitals - A Prescription for Survival" that between 1978 and 1995 the number of government-owned acute care public hospitals declined by one quarter.
|Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, |
PopMatters, Bellaonline, and eBookWeb, a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory and Suite101.
Until recently, he served as the Economic Advisor to the Government of Macedonia.
Most hospitals were or are being transformed into small,
communal, suburban or rural facilities. In the USA, less than
one third of hospitals are in inner cities and only 15% have
more than 200 beds. According to the American Hospital
Association, the 100 largest hospitals averaged a mere 581
beds in 1995.
|Public hospitals are in dire financial straits. Even in the USA, one third of their patients do not pay for medical services (compared to less than 5 percent in private hospitals). Medicaid barely - and belatedly - covers another third. Yet, the public hospital is legally bound to treat one and all.|
In other countries, national medical insurance schemes, the equivalents of Medicare/Medicaid in the USA, (e.g., the NHS in Britain), or mixed public-private ones (e.g., Kupat Kholim or Maccabbee in Israel) provide fairly extensive coverage. Community medical insurance plans are on the rise in both the USA and Europe. Corporate plans cover the rest.
|Still, uniquely in the USA, many potential patients remain exposed. More than 40 million Americans have no medical insurance of any kind. A million new disenfranchised join their ranks annually. This despite sporadic - and oft-unsuccessful - initiatives, on the state level, to extend insurance - in lieu of charity care - to the uninsured.|
This kind of deprived patient often consumes less profitable or loss leading services such as trauma care, drug-related treatments, HIV therapies and obstetrical procedures. These are lengthy and costly. Private healthcare providers corner the more lucrative end of the market: hi tech and specialty services (e.g., cardiac surgery, cosmetic surgery, diagnostic imagery).
|In "Our Ailing Public Hospitals - Cure them or Close Them?" published in "The New England Journal of Medicine", J.P. Kassirer mentions that public hospitals provide "culturally competent care". This fashion is the bane of public medicine. Providers are expected to deliver to their patients a politically correct package of social services and child welfare on top of the inanely expensive - and frequently unpaid for - medical treatment.|
Are your insurance premiums killing you? We have NINE WAYS to cut your expenses and get better rates. Compare what you have to pay now with the family-friendly values we find. See if the savings don't average 46% better than what you expect: Health Insurance * Dental Protection Plans * Comprehensive Auto Insurance * Low Cost Life Insurance Solid Home Insurance * Loving Long Term Care Insurance * Best Family Friendly Insurance Quotes It's simple, it's quick, and yes! It's absolutely FREE. And if you really CAN'T AFFORD insurance, Click HERE for your second-best option.
"Essential Community" hospitals are heavily dependent on public funding.
State governments foot the bulk of the healthcare bill. Public and private
healthcare providers pursue this money. In the USA, a majority of consumers
organized themselves in Healthcare Maintenance Organizations (HMOs).
|The HMO negotiates with providers (=hospitals, clinics, pharmacies) to obtain volume discounts and the best rates. Public hospitals -under-funded as they are - are not in the position to offer an attractive deal. So, they lose patients to private hospitals.|
Public hospitals derive more than half their revenues from federal insurance schemes such as Medicaid. This is five times the national average for all types of hospitals. They also benefit from state and local matching funds tied to their Medicaid receipts. This addiction to dwindling - and unreliable - federal and state financing spells doom.
|Medicaid Managed Care programs - intended to optimize the use of Medicaid funds - had the dual effect of reducing the coverage rate of public hospitals (i.e., their income per patient) and diverting business to ferociously competitive private ones. Public facilities are closing at a torrential pace.|
In some states, one in twenty calls it a day every year. Many states (e.g., New York) and municipalities (e.g., Los Angeles) seriously considered the abolition or privatization of all public hospitals. In some states, private hospitals now enjoy almost as much
|Medicaid business as public ones. HMO's (Health Maintenance Organizations) have discovered Medicaid as well.|
Yet, private, for profit hospitals, discriminate against publicly insured (Medicaid) patients. They prefer young, growing, families and healthier patients with Medicaid, Blue Cross/Blue Shield, or commercial medical insurance. These clients gravitate out of the public system, transforming it into an enclave of poor, chronically sick patients.
Mansfield Park was Jane Austen's most unpopular novel. To this day the novel still gets hate mail. Yet the suspicion is that with some fictitious name on the cover instead of the author's Mansfield Park would have been acclaimed a masterpiece in its own right. The book is free and ready for your immediate download so you can decide for yourself the merits of the book. In the back you will find numerous other fans and organizations to contact about what you have read. This version has pages that turn visibly and looks far more like an actual book.
This, in turn, makes it difficult for the public system to attract human and
financial capital. It is becoming more and more desolate, under-staffed,
|But public hospitals are partly to blame for this sorry state of affairs.|
There are striking similarities between these decrepit institutions all over the world. Public hospitals in New York are often indistinguishable from their counterparts in Ljubljana, Moscow, Tel-Aviv, or Skopje. Their bloated management and heavily unionized staff are opaque and non-accountable. They refuse to measure up to performance targets lest their revenues and remuneration be linked to the results.
|No one can tell how (in)effective and (non-)productive public hospitals are. There are no reliable statistics regarding the most basic parameters of service quality, such as wait times. Financial reporting and network development are dismal. 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.|
But privatization is far from being a panacea.
|It is difficult to imagine the private sector - private hospitals and HMO's - assuming the full load of patients now treated by the public sector. To start with, existing laws would have to be changed in constitutionally dubious ways. It is even more difficult to conceive of the government as a ideal and long-term "smart purchaser" of healthcare services from the private sector. Additionally, to cover all the uninsured would cost a fortune. The communities that phased out public hospitals in favor of Medicaid managed care suffered greatly according to various studies.|
David Copperfield is the favorite novel of Charles Dickens. The author felt nearer to it than any of his other masterpieces. It has been a favorite of the public too for well over a century. This version has pages that turn visibly and looks far more like an actual book. It is also available in pdf format.
242 Free Books That Are Priceless. Each book is handpicked for quality writing and Family Friendly Value. Instant downloads: Humorous, adventure, MoneyMaking, How To, Kids, Romance, Gee-rated, and Historical
Siegel notes that 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 (both medically and socially) for low income populations.
|He poses the |
What are the costs and quality of public hospitals relative to their non-government peers in selected cities? These data would need to be adjusted for case mix, socioeconomic status, degree of teaching activity and other variables. What segment of the public hospital market has been "captured" by competing HMOs and non-government hospitals? What are the risk profiles of these segments? What are the legal obligations of health care providers to treat indigent patients in selected states?
|Where public services have closed or been privatized, what is the impact on access to care for the Medicaid and uninsured populations? What is the impact on remaining providers? a.. What lessons can be learned from major cities and counties that lack publicly owned health care systems? In the absence of factual answers to these questions, the arguments boil down to differences in worldview and politics. Is healthcare a fundamental human right - or a commodity? Should healthcare be left to the invisible hand and distributive justice of the market?|
Should prices serve as the mechanism of optimal allocation of healthcare resources - or are there other, less quantifiable, but pertinent parameters?
Whatever the philosophical predilection, healthcare should be reformed. Siegel and Altman and Brecher ("Competition and Compassion - Conflicting Roles for Public Hospitals") survey the landscape of hospital reform in the USA:
Women s financial health. It s certainly not a new topic. In fact, the concept gains more and more interest each year as millions of baby boom women get closer and closer to retirement. |
If your mind, body and soul are in desperate need of renewal, where will you turn for help? The automatic response used to be, I ll be at the spa for a couple of hours, dear; but with a day at the spa costing upwards of $400, nowadays many people are turning to another place for peace and tranquility.
Leave A Legacy: Be Your Own Banker! Money you are already spending can make you rich, provide a stable income over your whole lifetime, and still leave millions of dollars for your heirs.
Public hospitals are increasingly governed by healthcare management
experts who are likely to emphasize clinical and fiscal considerations -
and not by politicians. This is coupled with the vesting of authority with
hospitals, taking it back from local government.
Some hospitals are organized as (public benefit) corporations with
enhanced autonomy (e.g., Memphis Regional Medical Center). Others
organize themselves as Not for Profit Organizations with
independent, self perpetuating boards of directors.
This is often coupled with increased transparency and
accountability. Clear quantitative criteria are applied to the use
of funds. Some hospitals started by revamping their compensation
structures to increase both pay and financial incentives to the
staff and thus attract talented people. In these reformed
institutions, pay is linked to objectively measured performance and
skills-related criteria. A system of bonuses, incentives, and - more
rarely - penalties has been applied to senior management.
The management of many public hospitals is trained now to use
rigorous financial controls, to improve customer service, to re-
engineer processes and to negotiate agreements and commercial
transactions. In some cases, staff is employed through employment
contracts with clear severance provisions that allow the management
to take commercial risks.
All this cannot be achieved without the full collaboration of the
physicians employed by the hospitals. Their very profession is being
"Most major public hospitals obtain a majority of their physicians
through affiliations with nearby medical schools ... But the nature
of these contracts and of health care has changed. Public hospitals
are now under intense pressure to improve continuity of care, expand
primary care capacity, reduce lengths of stay and meet a host of
managed care and budgetary constraints. It will be impossible for
them to do this so long as the physicians who make the bulk of the
clinical decisions practice in ways that are not aligned with the
imperatives of managed care and capitation. Physicians must adapt
their styles of practice and accept an emphasis on absolute
Some hospitals in the USA (e.g., Cambridge Hospital in
Massachusetts) formed business joint ventures with their own
physicians (PHO - Physicians Hospital Organizations). They benefit
together from the implementation of reforms and from increased
productivity. Scheduling of patient-doctor appointments, laboratory
tests, and surgeries are computerized. Obsolete information systems
replaced. Long turnaround times and redundant lab tests and medical
According to various studies published in "Modern Healthcare",
public hospitals have been downsizing for well over a decade now.
They reduced their labour costs from more than 70 percent of their
budgets 8 years ago - to less than 60 percent today. Many cut their
labour force by half. Union membership is on the decline.
Public hospitals all over the world are
transforming themselves into outright businesses.
They lease to their physicians - for use in their private, after-
hours, practice - space (e.g., operating theatres) or time slots, or
underutilized equipment. This kind of arrangement cropped up in
countries as diverse as Israel and Macedonia, Russia and Germany.
The lessee physician pays the hospital - either in the form of fixed
fees or in the form of revenue sharing (franchise arrangement).
In some countries, the physician also commits himself to provide
community-oriented, non profit or pro bono services in return for
the right to use what is, essentially, community property.
Another method of using the hospital's excess capacity is to sell
it, rent it, or lease it to entrepreneurs who are not members of the
hospital staff: small laboratories, specialty medical services,
primary care, and specialist practitioners. All these make use of
the superior infrastructure of the hospital under a concession, a
franchise, or a rental arrangement.
The hospital provides these professionals with a "captive market" of
patients. This is very much like the relationship between an "anchor"
in a shopping mall and the small retail shops surrounding it.
Hospitals - mainly in eastern Europe - also sell medical - and,
sometimes, non-medical - products and services to the community on a
commercial, competitive basis. Some hospitals offer for-pay medical
legal services, or print jobs by the hospital's print shop. They
operate the hospital's social services as a profit centre, offer
medical consultancy on a fee per service basis, and even sell food
from the hospital kitchen through a catering service, or data to
researchers from its archives.
A hospital is a galaxy of small (to medium) size businesses
operating under one organizational roof. Laundry, cleaning services,
the kitchen and its attendant catering functions, the provision of
television sets and telephones to patients, a business centre for
the inpatient businessmen - these are all profit or loss centers.
"Internal privatization" (or intrapreneurship) transforms the
hospital into a holding company. This holding company owns and
operates a host of business entities. Each such entity constitutes a
separate contractor which provides the hospital with a service or a
Thus, all laundry is done by a company which charges the hospital
for its services. The same goes for the kitchen, the print shop, the
legal services department and so on. These corporations employ the
former staff of the hospital. This way, institutional knowledge and
experience are preserved.
These corporations, owned by former employees, usually maintain
a "right of first refusal" in the first five years following the
transformation. They are allowed to match the best offers obtained
in yearly tenders conducted by the hospital. They are also allowed
to offer their services to other customers. Thus, they reduce their
dependence on one client, the hospital. They become truly
entrepreneurial entities, competing for profits in a market
A part of the re-engineering process is to determine which of the
roles of the hospital are "core competencies". All "non-core"
functions are outsourced in a tender to the most competitive
bidders. The hospital is likely to benefit from the transfer of
these functions, in which it has no relative competitive advantage,
to expert outsiders. This is somewhat akin to international (free)
trade, where each nation optimizes its resources and passes the
(beneficial) results to its trading partners.
To control this kind of transformation, medical information
management systems need to be introduced. These improve both the
quality and the quantity of data available to the management of the
hospital and, as a result, the decision making process.
This makes it easier for the management to pinpoint which areas
require doing what - for instance, what kind of incentives should go
to which members of the staff, where could costs be cut, and where
and how could productivity be improved.
Finally, a novel concept is emerging. Universities and hospitals are
two important repositories of human knowledge and experience.
Virtually every hospital somehow collaborates with an academic
institution, or with a medical school.
But, during the last two decades, hospitals have re-cast themselves
in the role of partners to the commercial exploitation of the
results of research conducted within their premises or with their co-
operation. Hospitals now collaborate in pharmaceutical, medical,
genetic and bioengineering studies. Hospitals believe that by
refraining from getting commercially involved - they give up money
which really is not theirs to give up in the first place.
Large hospitals also entered the managed care market - where laws
permit it. Some have established MCOs (Managed Care Organizations of
patients). Others insure patients outright and market their services
directly. Most hospitals now maintain their own network of
suppliers. HMO's are inevitably less than thrilled with the
emergence of these new competitors - but this process of
disintermediation is thought to have increased both the profit
margins and the absolute profits of public hospitals.
Public hospitals also pool resources to benefit from advantages of
scale. They relegate services - from auditing and accounting to
political lobbying - to commonly owned or merely centralized service
providers. These providers also negotiate contracts with suppliers
and specialists on behalf of the hospitals.
Some observers decry the apparent convergence between public
hospitals and their private brethren. Such derision is misplaced.
Public hospitals still treat the destitute and the immigrant. They
still provide a medical safety net where no alternative exists. They
are just doing it better, more rationally, and more cheaply. They
should do more to open up to scrutiny. They should spin doctor. They
should streamline. But one thing they should not do is regress to
where they have been in the early 1990's. This is what the doctor
Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant
Self Love - Narcissism Revisited and After the Rain - How the West
Lost the East. He served as a columnist for Central Europe Review,
PopMatters, Bellaonline, and eBookWeb, a United Press International
(UPI) Senior Business Correspondent, and the editor of mental health
and Central East Europe categories in The Open Directory and
Until recently, he served as the Economic Advisor to the Government
Visit Sam's Web site at http://samvak.tripod.com
in the following categories
Personal * Family * Inspirational * Helpful * War * Freedom * Money *
Click HERE to read our latest news.
We want MORE Essays. The writing inside the essays accepted here must be of superior quality. The topics must be either timely or enduring in nature. If you can pass that hurdle, your tightly written essays with strong values will be published here free of charge. A link back to your home page, or to your email address will be provided inside your byline, IF you want it.
Check out our whole site with one click..