Hospital Interaction With A Central Payer

I do not believe that all the businesses, which operate in America with health care as some part of their mantra, are necessary. If I were directing the operation of a central payer system, I would endeavor to stop paying for them. My list of necessary health care businesses can be seen in the diagram above.

How do I see the central payer interacting with these businesses for the accomplishment of the two major goals of our health care system:

  1. non-conflicted functioning of sound, ongoing doctor patient relationships for everyone and that everyone can afford,
  2. absolute significant profitability of necessary businesses to a level short of greed?

Let’s start with hospitals. Hospitals account for a major part of our health care expenditure in the USA.

Running a hospital is a complicated, difficult job and our hospital CEOs and CFOs and their entire staff should be commended. However, there are several things that I think should be corrected with regard to hospitals in our health care system:

  • They are functioning as independent business fiefdoms, and although that may be good, the non-profit status of the majority of them is bogus in my opinion. Calling a business with hundreds of millions of dollars in revenue and with exorbitant executive salaries non-profit is just wrong in my view. They should all be labeled for-profit and pay taxes.
  • Medical decision making is being greatly influenced by the dollar bill.                                                                                                                                                                                                                               Decision making in medicine must occur within the context of the equilibrium of trust called the doctorpatient relationship, and it must stay unencumbered and non-conflicted by the dollar bill. Otherwise, you wind up practicing dollar earnings and profit instead of practicing medicine. Doctors must rise against hospital administrators and tell them in certain English that medical decision making simply does not fall under their purview, ever. In my view, a hospital administrator’s job is to direct the operation of the cleanest, most well-run physical plant possible for the purpose of helping the doctors accomplish the clinical decision making of the doctorpatient relationship in a straightforward, comfortable, convenient manner. They need to make their hospital a lovely place for doctors to practice. However, any pressure to practice medicine a certain way, which places the financial well being of the hospital in a position to influence clinical decision making, is out of bounds. Examples of this are pressure for earlier discharge, managing illness in an outpatient setting when an inpatient admission is clearly the correct way to go and pushing home health nursing checks in favor of frequent follow up at the doctors’ offices. Hospital administrators must remember that doctors have one employer, the patient, regardless of who directly pays the doctor’s income. This doctor (employee) patient (employer) relationship takes superiority over business administrators’ machinations of how best to practice medicine. A central payer must recognize and accept this same concept. The job of a central payer is to administer payment of the bill for the work performed and not determine when, where, how often, or how that work is accomplishedIf this theme of the authority of the doctor patient relationship remaining free of dollar compromise is not central to our health care system, then what we currently have will never changeThe practice of medicine in America being socialized (obstructed, manipulated, controlled) by 3rd party payers, both private and public, and hospital administrators with their medical-business personnel.
  • I believe hospitals are often staffed by a spreadsheet mentality instead of by experienced knowledge resulting in safe patient to nurse ratios in various different units within the hospital.
  • Central payer approved certificates of need for that local community with regard to hospital construction projects are also a consideration.

With this in mind, how do I see a central payer interacting with individual hospitals in an effort to make sure that they sustain good profitability? The central payer should hire very experienced health care administrative personnel, doctors, nurses, technicians, physical plant engineers and private sector health care data mining experts thoroughly experienced in medical coding and in the costs of services and products related to those codes. These people should be older, mature with many years experience perhaps even retired from their health care career, and their job would be to discuss and negotiate payments with current hospital CEOs and CFOs. This negotiation is not an argument or a contest about saving money. It is an effort to determine the exact cost of hospital admissions for various medical codes in that locale and then to apply a payment amount which significantly exceeds that. I believe this can be accomplished in a straightforward manner. I would greatly simplify the medical coding system to help this process along and I would not hire unaccountable Washington, DC bureaucrats to work as part of a Central Payer.

There is an interesting (2006) article, which describes the state of hospital billing and gives some idea of the enormity of the task I have described.

There must exist a trust between the necessary health care businesses’ leaders and the experienced people working for the central payer, both of which groups share a common goal: To keep these businesses genuinely profitable while making the health care system affordable for the American people and while ascertaining that the decision making within the doctorpatient relationship remains free of dollar thinking.

R. Garth Kirkwood, MD

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