Saturday, October 29, 2011

A Place for the For-Profits?

I have long been skeptical about for-profit, investor-owned hospitals, suspecting that they would be more diligent in serving the interests of their owners than those of their patients.  I have tended to the opinion that such hospitals might perform acceptably as long as their patients were being cared for by private practice physicians who see themselves as more accountable to their patients than to the hospital.  If the hospital employed the physicians, things might be different.

But perhaps that point of view oversimplifies things.  An article entitled The Quiet Health-Care Revolution in the November 2011 issue of The Atlantic magazine describes the approach being taken by a California company called CareMore.  CareMore was founded during the early 1990’s by Dr. Sheldon Zimberg, a gastroenterologist who had the idea that by effectively managing care, patients would be better off and the provider could make good money.  In 1997, the company made the decision to focus on patients insured under Medicare Advantage, which pays CareMore a predetermined annual per-patient fee.  If CareMore can care for these patients at a cost less than the fee paid by Medicare Advantage, it makes a profit.

According to the article, CareMore holds the cost of care down by aggressively managing its patients so as to minimize acute episodes resulting in hospitalization.  A measure mentioned in the article was the provision of wireless scales to patients with congestive heart failure.  When the hearts of these patients go into “failure,” fluid builds up in the lungs, resulting in rapid weight gain.  The wireless scales broadcast their results to CareMore, which can be sure that patients weight them selves daily and observe any sudden changes in the results.  The results of this tactic, according to the article, was to reduce the incidence of hospitalization for these patients by more than half.

CareMore lost money during its first few years, but in 2000 it made a profit of $24 million.  In 2006, it was purchased by a group of private investors.  From 2005 until 2010, its membership grew by 15 per cent per year.  This past August, it was sold again, this time to WellPoint – a large national conglomerate of Blue Cross Blue Shield plans – which plans to expand the program into other areas of the country.

If the article describes things accurately, the CareMore achievement is an important step in health care reform.  It is hard to imagine it happening in the non-profit world.

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