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Friday, 24 January 2014 07:49

Hospitals and Doctors Make Money Off of Illness: Maryland Wants Them to Make People Healthier

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amed4881836429 95cb76dae8The current US medical system financially rewards hospitals and doctors (particularly highly compensated specialists) for performing more procedures and treating more diseased people, not for prevention (although the Affordable Care Act makes some progress in that direction).  It is perverse: The aging of the US population aside, the healthcare system becomes more profitable institutionally and personally (for medical providers) as the number of diseased patients rises and hi-tech tests and operations are performed. 

Furthermore, a recent New York Times article documented that it is not uncommon for multiple specialists to bill for even standard diagnostic procedures, even if their role was minimal or unnecessary.  

The net result is that the US healthcare system does not generally look at improving community health; it looks at marketing services to treat disease.  The more disease, the greater the revenue.

In a bold move, the US government has just given the state of Maryland (which has had a federal waiver to impose a uniform pricing system on medical charges) the opportunity to experiment with placing global reimbursement caps on hospitals.

How could this improve the overall medical well-being of individuals and neighborhoods?

As an article in Bloomberg Businessweek notes: "The state will also transform how hospitals get paid, from billing for each service provided—an incentive for doctors to order more tests and treatments—to getting paid for keeping people well."

That is how healthcare is offered in most developed nations, but in the US the current incentives are for waiting for disease to develop and then billing for long-term treatment of the disease -- as well as the latest costly technological testing and medication.  

Furthermore, one of the larger causes of death in the United States is the number of people who acquire incurable infections due to hospital borne pathogens. In short, many hospitals are not aggressively attempting to limit the transfer of disease while someone is in a hospital for the treatment of another illness!

Of course, there are many physicians and allied healthcare professionals who care deeply about their patients (particularly family doctors, who are declining in number), but the overall system incentivizes illness.

Although the details still remain to be worked out, in Maryland, according to Bloomberg Businessweek, medical reimbursement will move from fee-for-service to performance/outcome based payments.

Currently, medical care is provided in the US almost entirely based on billing that has no relationship to the results of the service provided.  True, one cannot hold the medical profession accountable for not being able to halt a virulent cancer, for example. However, there are many other medical conditions in which appropriate care and prevention (given patient compliance) can be assessed for reimbursement based on quality.

If Maryland succeeds in this innovative undertaking, its system could become a model for the nation in boosting prevention over the predominating financial model of treatment of disease after the fact.

In many other developed nations, this strategy has driven down the cost of healthcare to boot.

It makes a lot of sense and helps create healthy communities.  

(Photo: RambergMediaImages)

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