Skip to content
Technology Will Prevail, But What About Poor?
A revolution is sweeping across the health care industry, and it has turned medicine into big business. Bigger health systems mean better care, say some analysts. Others predict a crisis in which compassion is replaced by Wall Street toughness. Morning Call reporters Jeffrey G. Fleishman and Ann Wlazelek examined the trend in a three-month investigation encompassing more than 100 interviews and review of hundreds of medical documents and studies.
The medical revolution sweeping the country is transforming health care into big business and leaving many medical experts perplexed over how a free market system - which is certain to spur growth in research and tec hnology - can remain compassionate to the patient, especially the poor.
The questions arising from such concern may not be answered by the year 2,000, but the problems they imply will be wrestled with by hospital officials, politicians, social workers, medical experts and any American who ends up in a hospital.
Health care is being redefined. Where once a simple doctor-patient relationship existed, today it is one of health systems, chief executive officers, DRGs, HMOs insurance plans and a raft of new players.
Some medical analysts envision a future in which large hospital centers are the hub of an entire medical community. The hospital center would handle all acute care patients and all major operations. The second layer would be emergency and ambulatory care centers for outpatient procedures. Connected to the hospital center would be doctors who will market HMOs sold by this new medical community. There also would be clinics housing wellness programs, exercise classes, women's centers and many other health programs.
Since government cutbacks, which sent hospitals scrambling for bigger market shares and bigger profits, medicine has become a complicated business. Some experts believe that too much focus on business and profits will compromise medical ethics.
"Because of the emphasis on economics and diversification there are serious and
legitimate concerns as to the quality of care patients receive," said Thomas G. Goodwin, spokesman for the Federation of American Health Systems, which represents 1,400 for-profit hospitals.
So rapidly is the health care industry moving toward big business that many non-profit hospitals are in jeopardy of losing their tax exempt status. Hospitals were granted tax exemptions because they were expected to provide substantial free care to the poor. But with a new emphasis on dollars, many hospitals are forgetting this mission. The city of Burlington, VT., decided recently to tax its local hospital $2.8 million - the amount it received in real estate exemptions.
More cases like this one, which is headed for the Supreme Court, are expected to arise nationwide and force state and federal lawmakers to more clearly define the hospital's role in caring for the patient.
The future of patient care is one of many factors still unclear, as the medical revolution that started early this decade moves into the next century. Because of high technology, politics and other rapidly changing factors, medical experts say it is difficult to see too far ahead.
"No accurate predictions can be made," said Jan Schulman, spokeswoman for the American Hospital Association.
* * *
Nevertheless, there are some common factors looming on the medical horizon that seem likely to become intricate concerns in the future. And most experts agree something has to be done soon because of the following:
The graying of America will put greater demands on the health care industry because the elderly use more medical care than any other age group. High-technology and research will continue to get more sophisticated - meaning people will live longer and heal faster. The AIDS epidemic could cost $66.4 billion by 1991 and kill 200,000 victims, becoming a major medical challenge. Health systems will continue to battle one another for patients, doctors and technology. Insurance plans, from HMOs to PPOs will continue to complicate the health care insurance market. And doctors will continue their attempts to free themselves from the shackles of exorbitant malpractice premiums.
Despite these many obstacles to better health care, some experts interviewed said the future does hold certain promise for the patient.
HealthEast, non-profit holding company for the Lehigh Valley Hospital Center and Allentown Hospital, is a local example of a health system preparing itself to offer quality care and continue to reap profits in a turbulent medical future.
HealthEast is building a multimillion dollar trust fund for research. Like many other programs established before HealthEast's takeover of LVHC, the health system benefits from the $35-million Dorothy Rider Pool Health Care Trust.
LVHC is a teaching hospital with a strong link to Hahnemann University in Philadelphia. It is employing the latest technology, most recently a magnetic resonance imaging device (MRI), which takes 'pictures' of the body's organs without harmful radiation. It is marketing its own HMO and PPO insurance plans and is attempting to lure doctors to LVHC, which HealthEast officials call the premier medical center in the region.
HealthEast has made strides in many areas. Its trauma center - which has a MedEvac helicopter - is recognized as one of the best in the East and treated 3,000 patients its first two years.
Its cardiac program, which performed almost 950 open heart procedures last year, has made HealthEast the second largest open heart surgery program in Pennsylvania. HealthEast also runs the area's only burn center, which admits almost 60 patients a year.
Its other specialties include neuro-sciences, psychiatric services, alcohol and drug abuse programs and education, including the start of regional resource research centers for digestive diseases, kidney diseases and others. At Allentown Hospital, HealthEast has one of the busiest neonatal and maternity centers in the state.
HealthEast's competitors, Horizon Health System and Berkshire Health System, also are providing a wide range of services. For example, Horizon is working with Lehigh University laboratories on cancer and infertility research. Berkshire's Reading Hospital is one of the top surgical institutions in Pennsylvania. In a five-county region, Reading Hospital is one of the largest ambulatory care centers and was the first hospital to install an MRI.
HealthEast, Horizon and Berkshire are all diversifying into for-profit companies that are expected to bring in a new source of revenue as government funding continues its downward spiral. Each of the systems also receives discounts on medical equipment and other items by linking themselves to national purchasing and management groups such as the Voluntary Hospitals of America (VHA).
By diversifying and offering a wide range of services, these institutions are looking for survival - and eventually control - in a very competitive market place. In theory, this competition between the systems should benefit the patient by forcing hospitals to offer the best care, research and technology possible.
But there are minuses for the patient. . In attempts to provide comprehensive services, Lehigh Valley hospital systems - embroiled in one- upmanship - may instead form mini-monopolies that duplicate efforts.
* * *
This approach will eventually push up patient costs. For example, each of these systems made hefty profits last year, yet all have increased patient charges. And HealthEast will increase charges another 10 percent in 1988. In some cases, doctors said, these systems prematurely released patients in an effort to save money, especially patients on government programs or those without insurance.
A Pennsylvania Business Roundtable survey put the average total hospital charge in the Allentown area at $455 in 1985, tenth lowest of the 11 Pennsylvania metropolitan areas. Yet, Pennsylvania, with all its 250 hospitals being non-profit, has the highest health care costs in the country.
Some medical analysts predict that competition may result in some local independent hospitals either closing or joining larger health systems.
The concentration on economics and market control - while enhancing technology and research - could eclipse the hospital's primary mission of providing quality care for all patients. Politicians and medical analysts remain undecided over whether a free market medical industry will protect the poor.
Nationwide, there are 35 million people without medical insurance and another 15 million with minimal coverage - astounding figures in a country where many people believe medical care is a birthright. But today's medical revolution is reshaping American values on health care, and more importantly, reshaping how to determine who should get it and at what cost.
This has left poor people in both rural and urban hospital emergency rooms hearing questions like, "Do you have insurance?" and "If not, how are you going to pay? " If they answer incorrectly, the poor may not get stitched or not get X-rays.
They sit along hospitals' tiled walls and watch as the newest devices in medical technology roll past. In some cases they die, untreated, in a country that has the highest medical standards in the world.
The irony of the situation has medical experts stymied. How the poor have sometimes been forgotten is a relatively easy question to answer: Government cutbacks forced hospitals and doctors into free market competition, which by its nature caters to only those who can pay. But solutions to this problem are not as easy.
"Care for the uninsured and the under-insured is the most pressing nationwide issue," said Ronna Wallace, research director for the Massachusetts state House health care committee. "The Achilles Heel of the free market system is care for the indigent," said one medical analyst.
Twenty years ago, nearly everyone received medical care because costs were simply passed on to third party insurers and a federal government willing to reimburse.But government cutbacks and a tight insurance market no longer guarantee access to care. All of today's Americans will end up paying for health care for the poor, either through taxes or other plans. And proposed insurance plans for the poor may result in a restructuring of health care coverage for everyone.
Sixty percent of the uninsured or under-insured are employed but they have lost high-paying blue-collar jobs that provided full benefits. They are now working for small businesses or service industries that can't afford to provide insurance. The Lehigh Valley is characteristic of an area where people are caught in an economic transition in which medical care is no longer guaranteed.
The average Lehigh Valley regional unemployment rate last year was 7.6 percent. In Lehigh and Northampton counties, there are 20,000 people receiving medical assistance. "There are also a large number of people out there who don't qualify for medical assistance but can't support themselves," said a spokesman for Lehigh County's public assistance department.
To improve health coverage for the poor, Sen. Edward Kennedy, chairman of the Senate Labor and Human Resources Committee, has proposed that both small business and large industries in certain geographical areas pool insurance costs. Such a pool would provide coverage for all workers while taking some burden off the government, Kennedy asserts.
"There's a high likelihood of (Kennedy's proposal) working," said Uwe Reinhardt, professor of economics at Princeton University and an expert on health policy issues. The reason the proposal may become law is simple, said Reinhardt: It keeps the burden off the government, pacifies large industries already paying high insurance costs, saves small businesses and prevents unemployment.
"The proposal is deeply rooted in President Nixon's thinking of more than a decade ago. Kennedy has become a Republican instead of the other way around," said Reinhardt.
And politics, said Reinhardt, will definitely shape the future of health care. "Any one of the Democratic candidates running for president has a good grasp on the need for an improved system. But on the Republican side only Sen. Robert Dole stands out," said Reinhardt. Dole's chief of staff, Sheila Burke, said the senator believes health care reforms will have to be "a mix of private and public incentives. " She said mandating insurance benefits, expanding Medicaid and reshaping welfare to cover more health costs are ways to limit the gaps in the system.
A survey of the key health care legislators in Congress found that most called for reforms that would provide access to medical care for everyone and insurance for people with catastrophic illnesses.
Another solution, said Reinhardt, is the federal government passing the crisis on to state and local governments. New Jersey, Massachusetts, Florida and other states have established some type of tax to create pools that will cover indigent care. In Massachusetts, the indigent care pool - funded by a forced tax on insurance companies - has grown to $600 million in two years and cared for 600,000 people.
Reinhardt and other analysts said they don't believe any national pool will be established. Moreover, he said, each state will handle its own pool based on contributions from business and government.
Rashi Fein, professor of economics in medicine at Harvard University, said that the free market approach to medicine will keep out the poor, ultimately forcing the federal government to step in.
"In the next five to seven years," said Fein, "the federal government will once again discuss the possibility of a national insurance plan" similar to those in effect in Canada and England. Such a plan would most likely mean the federal government creating a national pool that each state contributes to.
In England and Canada, citizens are guaranteed free, socialized medical care. But even free care has drawbacks. In England some people must wait five years for elective surgery. Heart bypass surgery is generally not performed on anyone under 55.
Because Americans have gotten used to immediate and superior medical care, socialized medicine will not be accepted, according to many analysts interviewed.
"Socialized medicine won't work here," said Al Speth, administrator of the Lock Haven Hospital in central rural Pennsylvania. "You try telling an American he's got to wait a year for a gall bladder operation and you'll have a revolution on your hands. "
Dr. Howard Hiatt, a professor at Harvard Medical School, said, because America has distinctly different geographical areas with varying populations, no global solution can work. Dr. Hiatt has proposed that medical coverage be provided on a regional basis - that each region is run by a non-profit corporation that tailors health care coverage for the needs of that area.
The regional corporation would be the funnel for all health care funds from federal, state and local governments, and from private sources. To provide medical coverage for everyone, each of the funding sources would periodically make payments to the regional corporation. Government agencies would make payments based on the number of poor and elderly in each region. The federal government would also oversee all of the regional corporations.
"It's almost a province-by-province approach similar to that in Canada," said Hiatt. Each individual would be insured within his or her region. But the plan wouldbe comprehensive enough so that a person needing medical care outside the region would receive it immediately.
The American Assembly - a think tank of scholars and medical and legislative experts nationwide - issued a report last fall entitled "Health Care and Its Costs. " The report stated that the cost cutting mentality of the competitive health care industry threatens indigent care, medical education, research and technology.
"The vision of a medically-just society is at risk as a result of recasting medical care as a price distributed commodity," the report stated.
Cures for the health care industry are being debated nationwide. Many cures call for a combined approach by government and business, and insurance reform that will guarantee individuals policies with minimal gaps in coverage.
* * *
But most analysts interviewed indicated that any method of providing care to all patients, without leaving out the poor, will be difficult. Reinhardt predicts, however, that no matter what shape a proposed solution takes it will still discriminate against the poor. "We live in a two-tiered nation," he said.
Other factors that will greatly affect health care into the 21st Century and the institutions that will be affected are:
Outpatient services - Over 50 percent of all operations and clinical procedures done today are outpatient and that figure is expected to increase. Strides in research and technology, such as laser surgery, will continue to play a big role in outpatient services that will find the patient reporting to the hospital at 6 a.m., undergoing surgery at 7:30 a.m. and heading home before noon.
The outpatient boom will mean more ambulatory and emergency clinics, as hospital devote more time to acute care. Stock in companies that build ambulatory carecenters is already rising. Over the last five years, seven emergency clinics opened in the Lehigh Valley.
There also will be an increase in independent clinics run by doctors. In Allentown recently, two women's centers have opened - one by a group of doctors, the other by Allentown Hospital.
With outpatient procedures come an increased reliance on in-home nursing services, especially for the elderly. Today's elderly population is about 30 million, according to the Census Bureau. It will jump to 35 million in the year 2,000 and to 39 million in 2010.
With the graying of America, more and more people will be entering hospitals. If DRGs stay and outpatient procedures continue to escalate, the elderly will - in many cases - may be released prematurely. As a result, federal and state governments will have to reform Medicare and welfare to provide coverage for in-home care. But experts say that if government funding doesn't keep up with changes in the way medical care is provided, medical innovation will be useless.
Malpractice insurance - Doctors are claiming that skyrocketing rates hamper their ability to perform. In south Florida, which one medical journal dubbed, "Medicine's Beirut," emergency rooms are closing because doctors want to avoid malpractice suits. Malpractice reform is needed to protect patients from bad physicians but not to penalize all physicians. If malpractice rates come down, patient bills may also.
But doctors also must realize that in today's competitive market they are held more accountable for their actions. Where once patients unconditionally trusted the doctor they will now question him.
Doctors in the Lehigh Valley and across the country are realizing that they are less autonomous and more vulnerable to businessmen running hospital corporations. Many physicians worry about this; some have left medicine. Most analysts interviewed, including Jennifer R. Grebenschikoff, vice president of Physician Executive Management Center in Tampa, Fla., said the doctor eventually will adapt to the corporate world of medicine. Some analysts predict that during this
adaptation period there will be a physician shortage in the next century.
Non-profit hospitals - It is clear that non-profit hospitals and health systems have been pushed into acting like private-sector businesses. They must and will become more creative in bringing in money that will pay for research, education and other programs.
But many medical analysts said this creativity may force non-profit hospitals to become too preoccupied with costs and forget their "charitable missions. " Therefore, governments - state and federal - must provide programs in which non-profit hospitals will be guaranteed payments for the uninsured individuals they serve.
Also, as non-profit hospitals set up spin-off profit companies, such as laundries and pharmacies, the government will have to tighten anti-trust laws and other regulations to prevent them from competing unfairly with private businesses, according to analysts.
Because non-profit hospitals receive tax breaks, they also may have an unfair advantage when their spin-off businesses compete with the private sector. Some legislators say the government must decide how it wants hospitals to operate. If government does not want hospitals to lose sight of their charitable missions, it must create an atmosphere where they can survive without corporate takeovers and mergers.
Lehigh Valley hospitals - Overall, there is no reason to believe that Lehigh Valley hospitals are not offering quality care. However, the data with which the public can compare death rates and other hospital statistics are just beginning to be collected under the Pennsylvania Health Care Cost Containment Act, passed last year.
These statistics will let the patient be the judge of "quality care" and shop around for the best hospital. This, in turn, will increase the level of competition that already exists between the local health systems - HealthEast, Horizon and Berkshire.
Such competition can be healthy.
A review of local hospitals found that none of them outright turn poor patients away. However, there were a number of instances in which poor people were put on a bureaucratic treadmill for not having insurance. One woman said she was told that, if the government didn't pay her bill, the hospital would put a lien on her home.
"Hospitals will never turn people away. That's illegal," said Alan Jennings, deputy director of the Community Action Committee of the Lehigh Valley, who has been studying the difficulties the poor face in obtaining medical care. "But basically (hospitals) are scaring them away. "
Quality care for all patients, according to Charles MacKay, president of the Lehigh Valley Business Conference on Healthcare and other experts, should be a hospital's basic goal, not an "extra" or something used as a public relations tool. If they don't, said MacKay, they are betraying the public trust.
The patient - Frequently referred to as 'consumers,' patients are finding themselves in a new medical atmosphere. Americans have a love-hate relationship with medicine - they want quality care but they don't want to pay for it. That is changing. In today's competitive health care industry, the consumer will be asked to pay more. It's a tough pill to swallow, but most analysts said they believe Americans will take it over socialized medicine.
While they may have to pay more, Americans are in a unique position - they can call the shots. A competitive marketplace means a buyer's market experts said.
But the uneducated patient may fall victim to premature discharges and less than adequate care. Consumers - patients - will have to scrutinize their choice of medical care the same way they examine a car before buying it.
Advocates of the free market system say eventually the system will work out its kinks, weed out inefficiency and continue to give quality medical care.