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Thursday, August 14, 2008

About All the Savings They Can Afford

During my career in health care management career, it seemed that anything we did to generate savings always ended up costing more money. On occasion, some time after undertaking such an effort, someone would suggest that "we've gotten about all the savings out of that program that we can afford.”

Apparently things in health care are still like that.

Massachusetts has for some years had a free-care fund financed by assessing all hospitals. Grants from the fund were then made to so-called safety-net hospitals; i.e., hospitals that cared for a lot of non-paying patients. A high proportion of the money went to two institutions in metropolitan Boston – the Boston Medical Center (which includes the old Boston City Hospital) and the Cambridge Health Alliance.

Massachusetts enacted what was called health care reform in 2006. Actually it was a program to reduce the number of uninsured. Health insurance for persons with low incomes would be subsidized. Since the newly insured would now be able to pay for care, the cost of the subsidy would be offset, in part, by lower grants from the free-care fund.

A larger number of the uninsured than originally projected took advantage of the program, the cost of which therefore increased beyond the amount budgeted. An op-ed piece in the July 22 Boston Globe (“Doing the math on health care” by Jim Stergios) suggested that since there were fewer uninsured than expected, safety net hospital grants could be reduced more rapidly than scheduled.

Well, you can imagine the reaction that got. The July 29 Globe carried a triad of letters under the heading “Paying for Health Care Reform” – one from each hospital and the other from the labor union that represents their employees. All recited the dire consequences of grant reductions larger than originally planned.

Massachusetts and its free care fund may be close to realizing all the savings from health care reform they can afford.

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