Can I ask a question re: the health care bill

[teamturner]

I didn't want this question to get lost in other long threads. I haven't spent much time looking over the details of the bill. I just read this article and wondered why the government needs to control the existence or expansion of privately held hospitals. I thought the point of the bill was to ensure all people had health care. How does limiting hospitals and restricting hospital growth help with that? My dh and I both had orthopedic surgeries at out-patient hospitals that specialized in that. Also, why is it a bad thing for a hospital to make a profit?

 

Here's the article found at this link: http://www.investors.com/NewsAndAnalysis/Article.aspx?id=528337

 

ObamaCare Will Effectively Bar New Physician-Owned Hospitals

 

By DAVID HOGBERG, INVESTOR'S BUSINESS DAILYPosted 07:25 PM ET

 

Because of the new health care law, Dr. John Dietz has an empty building that he's not sure what he's going to do with.

Dietz is part owner of the Indiana Orthopedic Hospital.

"It is an expansion of our hospital that is three-quarters finished; it had three operating rooms for outpatient surgery," he said. "Now it can't be used for that purpose. We'll have to figure out an alternative for it."

Dietz and his fellow investors put $27 million into that new building.

Under the new law there are a host of bureaucratic hoops that physician-owned hospitals must go through to expand.

• The hospital must apply to the Department of Health and Human Services and can do so only once every two years.

• It must then wait for a period for members of the community to provide input.

• It must be in a county where population growth is 150% of the population growth of the state in the last five years.

• Inpatient admissions must be equal to or greater than the average of such admissions in all hospitals located in the county.

• Its bed occupancy rate must be greater than the state average.

• It must be located in a state where hospital bed capacity is less than the national average.

• Once a hospital meets all of those conditions, it is prohibited from expanding more than 200%.

And they are the lucky ones. There are currently 60 to 65 physician-owned hospitals under construction. Those that aren't finished and don't have a Medicare provider number by Aug. 1 (Dec. 31 if the reconciliation bill passes) will probably never open their doors. Without a provider number, such hospitals can't treat Medicare patients, which are usually essential to financial survival.

The feud over physician-owned hospitals has been boiling for many years. The American Hospital Association, along with key lawmakers such as Rep. Pete Stark, D-Calif., Sen. Chuck Grassley, R-Iowa and Sen. Max Baucus, D-Mont., have made numerous efforts to curtail physician-owned hospitals. In 2003, Grassley won a temporary ban on new construction of these hospitals in the Medicare prescription drug bill.

 

License To Ill

 

Ellen Pryga, director of policy at the AHA, said, "The provision is a good one that will stem the tide of an entrepreneurial approach to medicine that is potentially fatal."

But Molly Sandvig, executive director of Physician Hospitals of America, argues that the new restrictions undercut the broader health care overhaul.

Here we are with additional requirements for insurance and access, but we don't have the physicians and infrastructure to treat all these people," she said. "There's a need for additional hospitals, and this cuts the legs right out from under us."

Pryga said, "They've known that this was in the Senate and House bill, and if they went into new construction they knew that they were taking a risk."

Traditional hospitals claim competition from physician-owned rivals is unfair because they don't have to take money-losing Medicaid or uninsured patients.

 

Do Physicians Cherry-Pick?

 

"There is plenty of research that physician-owned specialty hospitals cherry-pick," said Pryga. "They send the lucrative patients to their own facilities and the others to the community hospitals."

"Anyone who feels like we are cherry-picking should come and see us at work," Dietz said. "We do everything from minor surgery to complex spine reconstruction. The only reason we send a patient to another hospital is if their insurance won't come to our hospital, if the patient wants it that way, or if his primary-care physician prefers another hospital."

The AHA says physician-owned hospitals cause other financial hardships for community hospitals.

"Hospitals can make additional expenses to rebuild a service (that competes with the physician-owned hospital)," said Pryga. "They may have to cut back on other services to do that. Also, most physician hospitals don't have emergency rooms and so don't have a point of entry for the uninsured and Medicaid patients."

Sandvig said, "That's been the rhetoric for nine years and the existing hospitals are not going out of business. Most are doing just fine."

A 2006 General Accountability Office study found "little evidence to suggest that general hospitals made substantially more or fewer changes or different types of changes if some of their competition came from a specialty hospital."

Because of the new law, the Global Rehab and Pine Creek Medical Center in Dallas will have to cancel plans for an expansion and for a new 66-bed hospital in Ahwatukee, Ariz . The physician-owned hospital did not lose more than about $230,000 on either one since neither was beyond the planning stage.

But, says Dr. Hooman Sedighi, a physician at the Center, "We are working at capacity, and if we want to add to capacity, this bill pretty much precludes that. The other thing is the potential job loss — the ones that are under construction or expanding, they would have been hiring additional staff and personnel."

Physicians who are not hospital owners had differing opinions on this legislation.

"The country is going to move in the direction of fewer hospital beds," said Dr. Daniel Fass, a radiation oncologist. "I think there needs to be a mechanism to rein that in. Efficient care is best delivered, if possible, in the outpatient setting."

Dr. Michael Hall, a family practitioner, said, "I personally don't see anything wrong with a physician owning a hospital. The costs, on average, are a lot less than what you get in a regular hospital. They tend to get you in and out quick."

Investors obviously think the new health care law will favor traditional hospitals. IBD's hospital group surged 5.5% to an 18-month high on Monday.

[Mommyof4ks]

I am confused by that too. Our local hospital has been able to plant satellite clinics in neighboring town so people don't have to drive so far to find doctors. They also buy really neat state of the art equipment that has helped patients get less invasive procedures done and equipment that has put their NICU in the top 10 in the nation for years. That is good growth IMO. They also have to make a profit to afford to help those that cannot afford care (which will still be a problem even with insurance as we found out a few years ago).

 

Hopefully someone else will have an answer though!

[asta]

Near as I have read, yes.

 

But I don't have a citation for you.

 

It is frightening to me that a hospital will have to justify any purchases of medical equipment. What happens when the MRI machine dies?

 

 

a

[NoPlaceLikeHome]

Actually, physician-owned hospitals are not necessarily a good thing. I have read articles regarding the same which told how they were not really equipped to handle emergencies and often in fact did not have emergency rooms to avoid having to offer free care:( Frankly, as a nurse, I would much rather have a procedure done at a full service hospital that is fully equipped to handle any emergency that may arise instead of having to be shipped by ambulance to the nearest full service hospital IMHO. These sort of facilities hurt full service, community hospitals IMO by siphoning off lucrative procedures from the hospitals. So I am happy if this bill prevents the expansion of these facilities.

[delaney]

You know ladies my friend stopped by last night(who is a primary care physician) and he is very happy with the bill. He said our local hospital will be in much better shape now financially. I just don't know anymore.....

[Renee in NC]

Actually, physician-owned hospitals are not necessarily a good thing. I have read articles regarding the same which told how they were not really equipped to handle emergencies and often in fact did not have emergency rooms to avoid having to offer free care:( Frankly, as a nurse, I would much rather have a procedure done at a full service hospital that is fully equipped to handle any emergency that may arise instead of having to be shipped by ambulance to the nearest full service hospital IMHO. These sort of facilities hurt full service, community hospitals IMO by siphoning off lucrative procedures from the hospitals. So I am happy if this bill prevents the expansion of these facilities.

 

It was a physician-owned hospital that caused my father's medical problems. He developed blood clots in his legs after back surgery at an orthopaedic hospital. Why? Because they never put surgical stockings or inflatable leg cuffs on him after surgery! (We won't even go into how his back surgery was done and the fact that he ended up worse afterwards than before.)

 

However, I don't like that fact that it limits them - they are a private business and should be allowed as long as they follow health/safety regulations that are the same as other hospitals. It does create a system where the people who can afford it get to choose and those who can't don't, but I don't think we can stop that.

[NoPlaceLikeHome]

It was a physician-owned hospital that caused my father's medical problems. He developed blood clots in his legs after back surgery at an orthopaedic hospital. Why? Because they never put surgical stockings or inflatable leg cuffs on him after surgery! (We won't even go into how his back surgery was done and the fact that he ended up worse afterwards than before.)

 

However, I don't like that fact that it limits them - they are a private business and should be allowed as long as they follow health/safety regulations that are the same as other hospitals. It does create a system where the people who can afford it get to choose and those who can't don't, but I don't think we can stop that.

 

:grouphug:

Yes, but I would not want to choose physician owned hospitals with limited services especially after working in hospitals for over 20 years which included 7 years of critical care. These physician hospitals/surgery centers do hurt community hospitals IMHO. I was told this repeatedly by our hospital administrators over the past 2 decades:(. Community hospitals are crucial for our communities IMHO.

[Krista in LA]

You know ladies my friend stopped by last night(who is a primary care physician) and he is very happy with the bill. He said our local hospital will be in much better shape now financially. I just don't know anymore.....

 

It's all perspective. My bff is the head of her dept at a hospital, my db is a PA in an ER, and my sil is a PA that does a lot of work in nursing homes and none of them are happy with it.

[Stacy in NJ]

We have no idea what the unintended consequences are going to be, both negative and positive. We're going to have to watch it unwind in front of us, and, unfortunately, there may be no undoing the negatives.

 

OT and ETA: John Deere has said the bill will add an additional 150 million to their second quarter expenses. Caterpillar Corp has made a similar statement. I wonder what impact the additional expense of this legislation will have on job creation at a time when we're experiencing nearly 10% unemployment, not to mention the nearly 4% tax on investment income.

 

http://www.deere.com/en_US/newsroom/2010/releases/corporate/25mar2010_corporaterelease.html

Edited March 25, 2010 by Stacy in NJ
more

[kokotg]

I just googled the John Deere thing, and found out that John Deere is owned by the insurance company United Health. Fascinating.

[Stacy in NJ]

I just googled the John Deere thing, and found out that John Deere is owned by the insurance company United Health. Fascinating.

 

citation or link that show it's owned by United Health?

 

Thanks, Stacy

 

ETA: Oh, I see. John Deere started it's own managed care health organization which it sold to United. John Deere is not owned by United Health; it sold one of it's subsidiaries to United. Big difference.

Edited March 25, 2010 by Stacy in NJ
more

[cdrumm4448]

We have no idea what the unintended consequences are going to be, both negative and positive. We're going to have to watch it unwind in front of us, and, unfortunately, there may be no undoing the negatives.

 

OT and ETA: John Deere has said the bill will add an additional 150 million to their second quarter expenses. Caterpillar Corp has made a similar statement. I wonder what impact the additional expense of this legislation will have on job creation at a time when we're experiencing nearly 10% unemployment, not to mention the nearly 4% tax on investment income.

 

http://www.deere.com/en_US/newsroom/2010/releases/corporate/25mar2010_corporaterelease.html

 

Taxing investment income takes away incentive to invest. What a great idea. :glare:

[kokotg]

Hmm...my google hand may have been a little too quick:

 

http://www.redorbit.com/news/health/323212/john_deere_health_care_sold/index.html

 

United Health bought John Deere Health Care, a wholly owned subsidiary of John Deere, in 2005. Apparently, John Deere used to include an insurance company and decided to sell that division to United Health in 2005. I apologize; I should have read more carefully.

 

The John Deere press release on the issue is incredibly vague, though:

 

Certain statements in this report are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to future events and financial performance. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things, the risks and uncertainties found in the Company's press releases and other SEC filings, including the risk factors identified under the heading "Risk Factors" in the "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's most recent Annual Report on Form 10-K, as updated by the Company's Quarterly Reports on Form 10-Q.

 

Huh? So WHY are they saying their costs will go up? Where are the projections coming from? There are no details at all about that, just disclaimers that they might be wrong about everything. Mostly I just think it's important to remember that everyone has a dog in this fight, and where the information is coming from matters. Wal-mart endorsed health care reform, after all (back in July; I don't think they've released a statement since the bill passed). What's different about John Deere and Wal-mart? I'm not suggesting that John Deere is making stuff up, but I'd certainly be interested in seeing more details about where the increased costs are projected to come from. It's also worth noting that the cost to employers of providing health care has already been rising dramatically for years.

Edited March 25, 2010 by kokotg

[kokotg]

Apparently, it's because right now the government offers a tax-exempt subsidy for retiree drug benefits, and under the bill the subsidy will lose its tax-exempt status. ETA: according to the WSJ's Marketwatch

[Stacy in NJ]

Apparently, it's because right now the government offers a tax-exempt subsidy for retiree drug benefits, and under the bill the subsidy will lose its tax-exempt status. ETA: according to the WSJ's Marketwatch

 

Well, according to WSJ that's one reason it's expenses may be going up. It doesn't provide a break down of actuals.

[teamturner]

It does create a system where the people who can afford it get to choose and those who can't don't, but I don't think we can stop that.

 

But that's exactly what this bill is designed to do, I think. Stop competition. I don't have a problem with the free market factors functioning in health care. The government should only be involved to the extent of ensuring safety.

[teamturner]

Actually, physician-owned hospitals are not necessarily a good thing. These sort of facilities hurt full service, community hospitals IMO by siphoning off lucrative procedures from the hospitals. So I am happy if this bill prevents the expansion of these facilities.

 

 

Don't these physician-owned hospitals run at a lower overhead and are therefore more efficient? If we do away with them to prop up the large full scale hospitals won't we in the end cause health care costs to rise? Not to mention the jobs created by such hospitals will go away.

 

Under this new system, it is the intent that health insurance companies will eventually go away because they will not be able to be profitable. That leaves the government in total control and who will have to financially support health care totally in this country. We will be left with higher costs and no new research and development from pharmaceutical companies and medical equipment companies since they will be spending so much money paying their taxes. (see below from an article from Investors Business Daily. I have not found these items in the bill myself yet.)

 

The government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019 (Section 1404)). Think you, as a pharmaceutical executive, know how to better use that money, say for research and development? Tough. (Section 9008 (b)).

 

The government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000. Think you, as a medical device maker, know how to better use that money, say for R&D? Tough. (Section 9009 (b)).

The reconciliation package turns that into a 2.9% excise tax for medical device makers. Think you, as a medical device maker, know how to better use that money, say for research and development? Tough. (Section 1405).

[MeanestMomInMidwest]

I have to agree with Priscilla on physician owned hospitals. I've worked agency at one. No ER so they don't have to accept patient w/o health insurance. The docs who have part ownership in it funnel all the good insurance carrying patients to the private hospital. All others go to the community hospital. No pharmacist at night (of course the patients who are getting open heart surgery there aren't told this). Beautiful rooms. Top notch food.

 

there are several other physician owned hospitals in the area. None has an ED. One was just successfully (and rightly, I might add) sued because a post surgical patient crashed, they didn't have the resources to deal with it so had to call an ambulance to transport the patient to the community hospital's ED.

 

Yes, it is market driven. but the market is people who base medical decisions on (a) doc's recommendation (b) how nice the hospital looks © convenience.

 

the community hospitals still provide the charity care, medicaid care, self-pay patients, but no longer have the positive revenue stream of insurance reimbursements.

[mcconnellboys]

"How does limiting hospitals and restricting hospital growth help with that?"

 

It helps the government gain control over all hospitals, so that it can do with them as its bureaucracy sees fit. The government wants to completely control all aspects of health care. There will be no more wealthy doctors.

 

"Also, why is it a bad thing for a hospital to make a profit?"

 

Profit is bad. This is about re-distribution of wealth. Not all wealth, mind. Just the wealth of the non-feudal class of America - the non-politicians. *Their* wealth is already protected off shore, no doubt.....

[NoPlaceLikeHome]

Don't these physician-owned hospitals run at a lower overhead and are therefore more efficient? If we do away with them to prop up the large full scale hospitals won't we in the end cause health care costs to rise? Not to mention the jobs created by such hospitals will go away.

 

Under this new system, it is the intent that health insurance companies will eventually go away because they will not be able to be profitable. That leaves the government in total control and who will have to financially support health care totally in this country. We will be left with higher costs and no new research and development from pharmaceutical companies and medical equipment companies since they will be spending so much money paying their taxes. (see below from an article from Investors Business Daily. I have not found these items in the bill myself yet.)

 

The government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019 (Section 1404)). Think you, as a pharmaceutical executive, know how to better use that money, say for research and development? Tough. (Section 9008 (b)).

 

The government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000. Think you, as a medical device maker, know how to better use that money, say for R&D? Tough. (Section 9009 (b)).

The reconciliation package turns that into a 2.9% excise tax for medical device makers. Think you, as a medical device maker, know how to better use that money, say for research and development? Tough. (Section 1405).

 

Again, you are free to choose using these physician owned facilities, but from my experience on all.the.things.that.can.go.wrong even in the hands of the best doctors, I will always choose a full service, community hospital that is appropriately equipped to handle all emergencies. Many of these places have to ship you to the nearest full service, community hospital when something goes wrong and as they say in medicine every minute counts in an emergency:(

[NoPlaceLikeHome]

I forgot to add that our local community hospital also offer trauma services which is life saving and these physician owned private hospitals make it more difficult to offer vital services such as trauma centers IMHO:(

 

IMO the last thing a community wants is to lose full service, community hospitals and trauma centers because of physician owned facilities:(.

[SapphireStitch]

Near as I have read, yes.

 

But I don't have a citation for you.

 

It is frightening to me that a hospital will have to justify any purchases of medical equipment. What happens when the MRI machine dies?

 

 

a

 

 

I was under the impression that hospitals already have to justify purchasing new equipment. Perhaps this is a state law in NC? I just remember it coming up in the news a few years ago because people were having to go get MRIs in the middle of the night because there were too few machines allocated for our area.

 

I do know in our area (again, I don't know if this state or federal control) hospitals cannot open new facilities without approval. My husband works for a medical school connected to a large medical center. They are trying to build a satellite hospital in a nearby town and are having to jump through all kinds of hoops. Their main competition also wants to build in that area and they are fighting each other's applications for approval.

[theresatwist]

"How does limiting hospitals and restricting hospital growth help with that?"

 

It helps the government gain control over all hospitals, so that it can do with them as its bureaucracy sees fit. The government wants to completely control all aspects of health care. There will be no more wealthy doctors.

 

"Also, why is it a bad thing for a hospital to make a profit?"

 

Profit is bad. This is about re-distribution of wealth. Not all wealth, mind. Just the wealth of the non-feudal class of America - the non-politicians. *Their* wealth is already protected off shore, no doubt.....

 

The liberals wanted price controls. There aren't price controls in this bill. Wealth is not being limited. You could certainly argue there is some distribution going on, but there are not limits on wealth that I can see and I've been reading everything I can get my hands on. Remember the AMA endorsed this reform. The doctors, unlike, in the Clinton era are for this. If it was pernicious to their profits do you really think the AMA would have thrown their support behind this reform?

[theresatwist]

Hmm...my google hand may have been a little too quick:

 

http://www.redorbit.com/news/health/323212/john_deere_health_care_sold/index.html

 

United Health bought John Deere Health Care, a wholly owned subsidiary of John Deere, in 2005. Apparently, John Deere used to include an insurance company and decided to sell that division to United Health in 2005. I apologize; I should have read more carefully.

 

The John Deere press release on the issue is incredibly vague, though:

 

 

 

Huh? So WHY are they saying their costs will go up? Where are the projections coming from? There are no details at all about that, just disclaimers that they might be wrong about everything. Mostly I just think it's important to remember that everyone has a dog in this fight, and where the information is coming from matters. Wal-mart endorsed health care reform, after all (back in July; I don't think they've released a statement since the bill passed). What's different about John Deere and Wal-mart? I'm not suggesting that John Deere is making stuff up, but I'd certainly be interested in seeing more details about where the increased costs are projected to come from. It's also worth noting that the cost to employers of providing health care has already been rising dramatically for years.

 

To me, John Deere has a troubling history whether it has some sort of insurance company connection or not...

[monk17]

Taxing investment income takes away incentive to invest. What a great idea. :glare:

 

Actually not always, if you witness the 8 years of tax breaks under Bush. It's pretty easy to track watching different money supplies and the tax savings did not go into investing in new plants or new business's. It went into fixed rate securities. After the smoke cleared on the Regan tax cuts the same thing happened there. Lots of voodoo economics out there! Google tax rates from 1915 and you will see that the upper end tax rate and the capital gains tax rate havve been at about historic lows for the last 9 years.