Unintended effect of stricter regulation
May 19, 2024
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May 19, 2024
Echoing concerns expressed by the nursing home industry, KFF Health News published a piece on how a change in Montana's staffing requirements caused some low-intensity addiction treatment facilities to close. For context, the article reports that "The new rules the state added at the same time brought the residential facilities up to American Society of Addiction Medicine standards." Yet, four out of fourteen facilities in the state have closed since 2022, when the changes took effect. Apparently, the state was hoping that moving to the higher Medicaid reimbursement rates would be adequate funding.
It seems like a difficult policy decision. As the article points out, various competing groups -- likely many for good causes -- are vying for additional funding. The legislators try to make the budget stretch. At the same time, people expect a certain level of quality from various service providers, and expect the state to enforce at least some of those standards, particularly among healthcare providers. Yet, people were probably hoping that the various facilities would improve without becoming unsustainable. In retrospect, it is probably not surprising that when higher quality is mandated, the funding must come from somewhere, whether that be owners' profits or from those who pay, or some combination.
May 12, 2024
For a long time, hospitals and clinics have frequently stated that they are unable to provide exact pricing for many surgeries until after the procedures are completed, citing a number of variables that might affect the final numbers. Now, however, some hospitals are requiring patients to pay before the procedure.
If hospitals are viewed as for-profit entities, this trend makes sense: hospitals can spend much less effort chasing down payments if they collect payments before the procedure -- perhaps when the patients are most motivated to pay. The article points out the "corporatization" trend in healthcare, where "more medical practices were owned by corporations than hospital systems."
Requiring prepayment of non-emergency services might still make sense for non-profit entities, if those entities have an appropriate charity policy to benefit the community sufficiently to justify the benefits of their non-profit status -- after all, those who can afford the procedure probably should not be allowed to impose onerous administrative work in collecting on bills. Fortunately, requiring patients to prepay for emergency services is not allowed.
Either way, it appears that these institutions no longer have qualms about disclosing pricing ahead of time. It is ironic, however, that the article points out that a hospital system that overcharged a patient was slow to refund the difference, requiring months of wrangling by the patient. Some sort of penalty on the hospital for creating the extra work in this case seems appropriate.
May 05, 2024
It is difficult to have a free market if consumers lack information about both pricing and quality. Unfortunately, for a long time, the US healthcare industry has lacked both pricing and quality information. Very slowly, pricing information is becoming more available. Information on quality metrics, however, has been lacking. For example, it would be nice to know the mortality rate and complication rate associated with a specific surgeon. KFF Health News published a piece about one man's quest to address a quality metric at the hospital level. His wife passed away while in an intensive care unit, even though the medical staff believed she was healthy enough that she would soon be discharged. The husband believes that the hospital had inadequate nursing staffing levels to stabilize her condition when it deteriorated.
The husband's proposed solution is for the state government to mandate nursing staffing levels to ensure that hospitals have enough nurses for their patients. Both the hospital industry and nursing unions appear to agree that there is a shortage of nursing staff employed by hospitals. However, nursing unions seem to blame hospitals' cost-cutting measures, which includes inadequate staffing levels, leading to burnout. The article points out that hospitals do not get paid for nurses, whereas they do get paid for procedures that are done by physicians.
The husband is quoted as believing the proposed legislation to mandate nursing staffing levels would save lives. The legislation would indeed probably result in better patient care and saved lives. However, the costs are unclear. Beyond the financial costs that hospitals would have to bear for increased staffing (costs that they will likely pass on to insurers), there is also a cost in terms of hospitals that would close wards rather than operate them at the higher cost to be in compliance with the new legislation. The reduced access could mean that while the legislation could save lives in some hospitals, it could also cost lives elsewhere. That is likely an empirical question for academics to weigh in on. In the meantime, it would at least be nice for more statistics about the quality of care (including patient survival rates) to be published for both academics and the public to see.
April 28, 2024
The Department of Health and Human Services issued new regulations that mandates specific staffing requirements for nursing homes, such as the amount of care that must be provided (on average) to each resident. KFF Family Health News reported on various reactions to the new rules.
The different political parties were quoted with reactions as one might expect: Democrats praised the change with one saying "much more is needed to ensure sufficient care and resident safety"; a Republican was quoted as saying that the new regulations would "devastate nursing homes across the country and worsen the staffing shortages we are already facing." Understandably, advocates for nursing home residents praised the move, while an industry association that represents nursing homes said that the regulation "creates an impossible task for providers."
Notably, the Centers for Medicare & Medicaid Services (CMS) estimated that the new rules will cost $6 billion, but there does not appear to be any plan for CMS to increase reimbursement. Many nursing homes rely on payments from Medicaid and those facilities most likely will not be able to raise prices in the short term. The additional costs would reduce profits for the owners of those facilities. Some have argued that nursing homes will close because of the additional cost, but the article linked to a study showing that nursing homes are generally more profitable than they appear, given that nursing home operators frequently inflate costs that they benefit from (e.g. cost of rent while they own the real estate as a separate business). It seems likely that at least a few nursing homes will close because of the regulation, but it is unclear how many will. On the other hand, the quality of life at these facilities will probably improve for residents at many nursing homes.
April 21, 2024
Sometimes, more care earlier on can be less costly in the long-term. KFF Health News reported on a program known as Chronic Care Management, where Medicare pays doctors extra to monitor the health of their patients who have two or more chronic conditions. The article reports that early research found that the program reduced total health spending (by decreasing visits to hospitals), but also that participation has been limited.
From the doctors' side, increased documentation is needed, and new staff might need to be hired to handle the increased work. Not all patients want to participate, since some of them do not want to "be bothered or asked if they are exercising or losing weight or watching their salt intake."
Nevertheless, this program seems innovative in that it appears to reduce the long-term total cost of care while actually improving quality of care for those who participate. The article also points out that companies have jumped in to offer their services to help reduce the workload for doctors' offices. Some services appear to work better than others, but overall, this appears to be another example of capitalism at work.