On Point: Understanding limitations

By Stanley Hupfeld

The Daily Record Newswire

In the lyrics to a famous country-and-western song, Toby Keith sings about being egged on to engage in a bar fight. His response is, "I'm not as good as I once was, but I am as good once as I ever was." Apparently, knowing one's limitations is important in bar fights.

It may also be important for hospitals to understand their limitations in a post-health reform world.

Hospitals across the country have become measurably good at delivering high-intensity acute care to patients in beds. American hospitals have acquired enormous amounts of modern technology and the human capital to use their expertise to diagnose and treat. Many hospitals have extended this knowledge to outpatient services, including the tangential skills necessary for the delivery of home health, hospice and even long-term nursing care.

Our reimbursement system pays for services delivered. Hence, the more sophisticated and the more comprehensive the services, the greater the payment for hospitals. The greater the payment, the greater the margin. The greater the margin, the more capital and borrowing power a hospital accumulates. Hospitals, by nature, are capital-intensive. As they acquire more capital, they can apply those resources to ever-newer technology - which, in turn, allows them to access even more capital. You get the picture.

This capital cycle fuels an arms race among hospitals as they compete and throw even more new technology into their competitive environment. Thus, in every major city in the United States there are numerous hospitals, all aggressively trying to outdo each other in a race to be the "only," or the "first," or the "best," in any particular clinical field.

As a consequence of this intensity of competition, the bar has been raised for every hospital. Hospitals have become pretty good at this high-tech stuff. However, it has also come at a very high price in terms of health inflation. This intensity of competition does not drive down prices as it would in most other fields but, in fact, raises it. But that is a discussion for another day.

The underlying premise behind the Patient Protection and Affordable Care Act is that we must drive patients out of hospitals and into less expensive venues of care. Our caregivers must learn how to care for populations of patients, pursue public health initiatives, and "integrate with physicians" to pursue an agenda to keep people out of hospitals, if at all possible.

While former reimbursement patterns led us to want to do as much as possible for patients, the new mantra is to do as little as possible consistent with keeping people healthy.

In today's raging health cost environment, a minimalist approach to the delivery of care actually makes sense. In addition, hospitals would be compared to each other across a number of indices, with only those that perform the best and safest being rewarded. While this new era makes perfect sense (because our present system is unsustainable), it is going to require hospitals to do things they traditionally have avoided.

They have been good once, but will they ever be as good as they once were?

----------

Stanley F. Hupfeld is the chairman of the Integris Family of Foundations. He is a fellow of the American College of Healthcare Executives.

Published: Fri, Jul 15, 2011