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Medicaid Rates So Low, Hospitals Consider It Charity Care

Most hospitals have slim margins, and budgets are set based on anticipated average patient reimbursement at Medicare rates. Some private insurers pay higher rates than Medicare, and the differential is often used to offset the cost of treating Medicaid patients. Medicaid reimburses at about half what Medicare pays, which is usually not enough to break even. Out of financial necessity, Medicaid patients are often given limited access to care and services. This is done in some subtle and some not-so-subtle ways. In a recent conversation with an orthopedist friend of mine, he confided in me candidly:

“Some of my colleagues in private practice can’t pay their office overhead if they treat Medicaid patients. So we see poor people with severely arthritic joints left in pain at home. In addition, with bundled payments, the surgeon gets a fixed amount for the patient’s operation and recovery. What incentive is there to send the patient to a rehab facility? It just takes money away from the surgeon. So the poor have to suffer with very long wait times to see someone who will operate on them, and then afterwards they’re on their own for recovery. Patients who go straight home are at higher risk of falling and may have much poorer outcomes. Surgeons get financial incentives for good outcomes, so it becomes a double disincentive to treat Medicaid patients. You don’t get enough for the operation, and you’re likely to get penalized for their poorer outcomes. Some surgeons I know wont touch a patient with Medicaid for any elective procedure. I have ethical problems with that – so I work at a non-profit hospital where we treat everyone. But I have to do higher volume to break even. I work 90 hours a week and barely see my family. I don’t know how much longer I can do it.”

It is common practice among nursing homes to have a limited number of “Medicaid beds.” The facility simply declines to admit more than 20% of patients with Medicaid. I hear case managers on the phone all day long, looking for a post-acute care facility who will accept a Medicaid patient. For the few non-profit facilities who don’t turn them away, deep financial costs are incurred as they struggle for survival.

The reality is that Medicaid rates are so low that having this insurance is not much better than none at all. As I’ve explained previously in the outpatient world (see an example of an insanely low Medicaid reimbursement for eye care), Medicaid is tantamount to charity care. The news that 21.3 million Americans might receive Medicaid coverage in the next decade should not be hailed as a leap forward. As I see it, that’s just a larger group of people with debilitating arthritis who can’t get hip and knee replacements and are left to suffer in pain at home.

Why Government Healthcare Is Your Best Bet

A friend who works with the unemployed called me up the other day huffing with indignation. The local charity clinic, apparently overwhelmed, had changed its policies so that her unemployed uninsured would no longer be able to seek care there.

“Someone has to do something!”

Um, what exactly would that be? I’d love to help, but I have bills to pay (as do charity clinics) so I can hardly provide medical care without seeking payment. I understand her desperation (and that of the people she so valiantly helps) but who, exactly, is supposed to do what, precisely?

Things are going to get worse before they get better, I fear. The unemployment issue goes way beyond a devastating economic downturn. It’s a reflection of the most basic economic principle of supply and demand. Wages are the “price” of labor — prices go down when supply goes up. In the case of labor, it’s when you have large numbers of people willing to accept lower wages. Can you say “outsourcing?” Watch as the jobs flow overseas while we’re still left with all these people, but not enough jobs to support themselves. In the meantime they all still need healthcare, but can’t pay for it.

Someone has to do something!

Guess what? It just so happens that we really do have a healthcare infrastructure in this country. Between the Veterans Administration (VA) and public healthcare clinics, we have rather a good start at building a truly national healthcare system. Perhaps now is the time to expand it. Read more »

*This blog post was originally published at Musings of a Dinosaur*

The Often-Unexamined Costs Of Healthcare

by Marie Cooper

I have been in senior executive management in both managed care and a major hospital system. I find the hysteria over “reform” bitterly amusing because it is so misdirected.

The real problem with health care in America? Greed, indifference and incompetence, pure and simple. But not in the places everyone is pointing.

Insurer side

Insurance companies have to maximize their revenue because they answer to their boards. They are in no rush to fix claims systems that make copious errors and delay payments to providers. There are hundreds of claims processing software programs out there. Some are acceptable, some are useless. None are really good or efficient. And there is the human error factor. A careless mistake by an apathetic claims processor can create payment problems that could literally last for years. Read more »

*This blog post was originally published at*

Latest Interviews

IDEA Labs: Medical Students Take The Lead In Healthcare Innovation

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I am proud to be a part of the American Resident Project an initiative that promotes the writing of medical students residents and new physicians as they explore ideas for transforming American health care delivery. I recently had the opportunity to interview three of the writing fellows about how to…

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Latest Book Reviews

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The Spirit Of The Place: Samuel Shem’s New Book May Depress You

When I was in medical school I read Samuel Shem s House Of God as a right of passage. At the time I found it to be a cynical yet eerily accurate portrayal of the underbelly of academic medicine. I gained comfort from its gallows humor and it made me…

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Eat To Save Your Life: Another Half-True Diet Book

I am hesitant to review diet books because they are so often a tangled mess of fact and fiction. Teasing out their truth from falsehood is about as exhausting as delousing a long-haired elementary school student. However after being approached by the authors’ PR agency with the promise of a…

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