The Slow Strangling of Health Care by Unseen Hand

The New York Times reports on the future of America’s health care system if present trends continue, through the struggles of Grady Memorial Hospital of Atlanta. 

Once admired for its skill in treating a population afflicted by both social and physical ills, Grady, a teaching hospital, now faces the prospect of losing its accreditation. Only short-term financial transfusions have kept it from closing its doors, as Martin Luther King Jr.-Harbor Hospital in Los Angeles County did last year. That scenario would flood the region’s other hospitals with uninsured patients and eliminate the training ground for one of every four Georgia doctors…

Although the hospital is unique in many ways, the code red at Grady is emblematic of the crippling effect America’s health care crisis has had on public hospitals around the nation. Though Grady is among the most distressed of the country’s 1,300 public hospitals, others have faced similar challenges in recent years, including those in Miami, Memphis and Chicago, said Larry S. Gage, president of the National Association of Public Hospitals and Health Systems. There are 300 fewer public hospitals today than 15 years ago, with hospitals having closed in Los Angeles, Washington, St. Louis and Milwaukee, Mr. Gage said.

Dr. Carlos Del Rio, Grady’s chief of medicine, calls the hospital “the canary in the coal mine.”

Well spoken, Dr. Del Rio. And the problem, it turns out, is one of “inputs:”

Like other public hospitals, Grady is operating on a business model that is no longer sustainable. A third of the hospital’s patients, including those treated as outpatients, are uninsured, among them a rapidly growing group of immigrants. Another third are covered by Medicaid, which reimburses at rates well below Grady’s actual costs. Many hospitals use their privately insured patients to subsidize indigent care, but at Grady, only 8 percent of inpatients fit the privately insured category.

In large part, that is because in Atlanta, as in most other cities, better-financed private and nonprofit hospitals are able to market their services and high-tech equipment to patients with good insurance coverage, including those on Medicare, leaving Grady with little but those it was intended to help: the under-insured and those without insurance at all. The National Association of Public Hospitals says its members account for 2 percent of all hospitals, but provide 25 percent of the nation’s uncompensated care.

So there are better mousetraps over at the privates and nonprofits, which leaves those who can’t afford mousetraps beating no paths to anyone’s door but the Grady’s of this country. But only for the time being.

Over the years, the cost of caring for the uninsured and underinsured has grown while taxpayer support has stagnated. Suburban counties have declined to pay a share of those costs, though their residents regularly wind up in Grady’s emergency room and its highly regarded centers for burn and poison treatment. Management problems within the hospital have played a role, and community pressure has kept Grady’s politically appointed board from making deep cuts. As a result, the hospital has faced deficits for 10 of the last 11 years.

For 35 years, taxpayers have been trained to say “it’s not my problem if I can help it.” Citizens have been trained to say “the free market is best.” See Republicans in New Hampshire over the weekend falling all over themselves with free market solutions to health care:

But gentlemen, the situation at Grady is the unseen hand of the market. See it? smell it?

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