Déjà Vu All Over Again
Stanley Feld MD,FACP,MACE
I have stated that all of the stakeholders are at fault in creating a dysfunctional healthcare system. Most of the media articles are critical of the defects in the system, as well as the stakeholders abusing these defects in the healthcare system.
The last few weeks have highlighted a few defects. The defects have resulted in corporate abuse by the facilitator stakeholders. The government is trying to take steps to correct the abuses. However, no one in the media is trying to connect the points. It seems to me when something happens, it is reported. The public gets upset. Newspapers are sold. The story then blows over.
I believe the power of the internet, along with blogs and the development of topic specific search engines will be the vehicle that allows us to connect the points. We will understand the significance of the media stories. Understanding problems usually leads to populous pressure in America with a resulting change.
A few weeks ago HCA went private for 31 billion dollars. The result, the best I can tell from the internet financial information about a public company and the buy out terms reported, was the Frists walked away with about 8 billion dollars in cash and reinvested between $800,000 million and $1.6 billion dollars. Their ownership position went 40% to 14%. There is a great advantage to be a private company in the present healthcare system environment. The principle advantage is their financial position can become more opaque compared to the level of opacity presently. The problem is they have $25 billion in debt to service and pay verses 11 billion dollars before the leveraged buyout. The government cleared the way for the buyout
There only seem to be two ways to pay off debt. One either sells of assets or raises prices. Today, HCA announced that is selling a money losing hospital in West Virginia to CAMC Hospital Care System. The sale will stop the $2.4 million bleed since 2005 and add $19 million to its bank account.
This is occurring in an environment where Medicare is supposed to be calling for transparency in pricing. Price Transparency should benefit of the patients and the cost of medical care. The goal of Price Transparency is for patients to be informed healthcare consumers. They can then make responsible healthcare purchases at an affordable cost while being in control of their healthcare dollar.
Before the ink on the deal dried HCA raised their fees to the insurance industry. United Healthcare plan and HCA were very far from a contract in Denver. The 800,000 patients (the primary stakeholder) with United Healthcare insurance will have to find other hospitals and physicians in the Denver area if agreement can not be achieved by August 30. If they do not change hospitals and physician they will be liable for complete retail payment of fees. Yesterday, it was announced that HCA raised the price in the Florida market. United Healthcare has refused to accept the price increase on the grounds they can not afford the increase.
The question in the supposed environment of Price Transparency for the consumer (patient) is; “what is the justification for HCA’s price increase? I bet we will never know.
I suspect as each new contract comes up, we will see isolated small media stories about the price increases state to state and insurance vendor to insurance vendor. However to the nation, this will not be new news and will not be picked up by major media outlets. The problem will fade away. No pressure will be applied to solve the problem.
My guess is the best thing United Healthcare Insurance Company can do is drop HCA. In the Denver area, United has 800,000 people insured presently. Many of who use HCA’s hospital system for care. With HCA’s tremendous debt service and brick and mortar expenses, HCA’s prices will come down to manageable levels or the HCA hospitals will close as HCA loses contracts.