As a hospital CEO, I spend a good part of most days worrying about the cost of health care and specifically how the rising costs affect my hospitals.
The cost of health care is something everyone, from patients to providers to payers, need to be concerned about. As an employer, I also know the impact that costs have on our insurance premiums and utilization. We understand that an aging population, and pressures by insurers to hospitalize only the sickest patients, means today’s patients are sicker, older, and have conditions that require more sophisticated and increasingly expensive care. So, what is the answer? There are no simple ones.
Let me give you a sense of what goes into a “hospital dollar”. Almost two thirds, 65 percent, of the cost of running a hospital is spent on labor – physicians, nurses, and the scores of support personnel who make up the hospital staff. We couldn’t provide care without them. Massachusetts has a high cost of living and has one of the highest labor costs of any state in the country. A higher living cost, coupled with a growing workforce shortage, helps drive up the cost of the health care we provide.
Another nearly 20 percent is spent on drugs and medical supplies. Again, both are essential to the operation of a quality hospital. Our country’s increasing dependence on the use of medications, numerous new medications and procedures, and the fear of liability for not offering state-of-the-art practice push our costs even higher.
That’s just a snapshot. Other costs, like utility expenses, maintenance, etc. make up the rest. All of these are important in the overall discussion of controlling the rate of growth of health care spending.
What’s clear is that this is not simple. There are many parts and people who are involved – the insurers, the state and federal government, the physicians, the hospitals, the pharmaceutical companies, and yes, the patients. And it is a “shared responsibility”, just like the shared responsibility that is the hallmark of health care reform. What does that mean? It means insurers and providers should work together to find ways to standardize billing and coding. It means the state and providers must establish a common framework for measuring quality and cost. It means all involved must come up with innovative ways to fill the workforce shortages, by supporting our educational system and by providing on the job training. It means we must find ways to avoid duplication and inefficiency.
Many hospitals are already working to reduce the rate of spending growth while improving the quality of care; all are adopting electronic medical records systems, and shifting care out of the hospitals and into outpatient care settings. But there is obviously much more that must and can be done – and we must work together. We should not forget that when you look at health care across the United States, Massachusetts ranks among the leaders in both quality and access. Both of these make us the envy of the nation. We are leading the way on the first phase of health reform – getting people covered. And now we have the obligation to preserve these achievements by together tackling health care spending and once again leading the nation.
Michael V. Sack
President and CEO, Hallmark Health
According to the Department of Health Care Finance & Policy, hospital profits in Massachusetts continue to soar. According to the Department of Public Health, 2000 patients die every year in Massachusetts from preventible, hospital-acquired infections. So why can’t hospital CEOs commit to the proven remedy: a reasonable limit to the number of patients a bedside nurse is expected to care for at one time? RNs are the quality-control factor in health care. They need to be there to protect the patients. We need to pass H.2059, the Patient Safety Act. We need to guarantee adequate levels of professional and support staff. Cf: .
Sandy Eaton, RN
Staff Nurse, Quincy Medical Center
President, Region 5, Massachusetts Nurses Association
Kudos to the CEO for pointing these problems out to us! And what a pity: all those employees make for quite the expensive operation indeed. But could anyone be a bit more specific? Not now, maybe later – for such stats aren’t exactly within the scope of this piece, but let me weigh in with a couple of outside observations. And, I might add, I hope I’m ALWAYS outside any given hospital!
While grunting and sweltering on a tree job this past spring, I chatted with the owner of the property who had a sister employed as an RN by one of these gigantic ‘non’ profit hospitals.
Her current wage, he said, was in the $55.00 per hour range, then he added, “no wonder healthcare costs are so high!” From this we can surmise it’s not rocket science why those nifty hospitals want to cut the nurse-to-patient ratio! Funny, no executive salaries were mentioned that day, but I couldn’t help wonder how they might effect that balance sheet.
So what about the rest of us out here in multifarious other professions, hoping against hope that we can put off our interactions with hospitals and their ilk as long as possible? And the beloved insurance mandate that would see the parasitic HMO industry gleefully soaking us for $8,800 per year? Does THAT
In accordance with Mike Sack’s assessment, “today’s patients are sicker, older, and have conditions that require more sophisticated and increasingly expensive care”, youbetcha.
And don’t think for a minute the sick-care industry doesn’t see an unlimited pot of money there.
Only now they have a way to extract it – by force: it’s called Chapter 58.
Good luck running the business, Mike. Hope you turn a tidy profit caring for those with all those sophisticated needs – And I’ll do my best to see to it that happens without any of MY hard-earned money.
Sincerely,
Dave Hopkins
And she
Kudos to the CEO for pointing these problems out to us! And what a pity: all those employees make for quite the expensive operation indeed. But could anyone be a bit more specific? Not now, maybe later – for such stats aren’t exactly within the scope of this particular ‘healthcare dollar’ piece, but let me weigh in with a couple of outside observations. And, I might add, I hope I’m ALWAYS outside any given hospital!
While grunting and sweltering on a tree job this past spring, I chatted with the owner of the property who had a sister employed as an RN by one of these gigantic ‘non’ profit hospitals.
Her current wage, he said, was in the $55.00 per hour range, then he added, “no wonder healthcare costs are so high!” From this we can surmise it’s not rocket science why those nifty hospitals want to cut the nurse-to-patient ratio! Funny, no executive salaries were mentioned that day, but I couldn’t help wonder how THEY might effect that balance sheet.
So what about the rest of us out here in multifarious other professions, hoping against hope that we can put off our interactions with hospitals and their ilk as long as possible? And the long-dreaded insurance mandate that would see the parasitic HMO industry gleefully soaking us for $8,800 per year? Does THAT figure sound sustainable – or even possible?
For Mr. Sack’s part, the phrase “shared responsibility” sounds vaguely laudable, but upon closer inspection, has a tyrannical, confiscatory ring to it. Indeed, the foregoing executive’s editorial speaks volumes to the fact that these folks live and move in an entirely different world than the working class – and that seems to go double when applied to sick-care issues!
In accordance with Mike Sack’s assessment, “today’s patients are sicker, older, and have conditions that require more sophisticated and increasingly expensive care”: youbetcha.
But don’t think for a minute the sick-care industry doesn’t see an unlimited pot of money there.
Only now they have a way to extract it – by force: it’s called Chapter 58.
Good luck running the business, Mike. Hope you turn a tidy profit caring for folks with all those sophisticated needs – And I’ll do my best to see to it that happens without any of MY hard-earned money.
Take THAT to the bank, Pilgrim!!
Sincerely,
Dave Hopkins