Community Health and Providence Health Care are squaring off over the $58 million medical park the latter is building in Spokane Valley. Normally, Providence would need a Certificate of Need before beginning construction, but the state has granted an exemption. So, it’s, “Gentlemen, start your bulldozers.”
Except Community Health, the company that bought Valley Hospital and revived its fortunes, doesn’t appreciate Providence’s expansion onto its turf, even if it is an outpatient facility. So it has filed a legal challenge to the state’s waiver.
Rather than choose sides in this battle, I’d rather shine a spotlight on how this dust-up exemplifies yet another roundabout attempt to nibble at health care costs, rather than construct a comprehensive lower-cost health care system.
We’ve tried HMOs, DRGs and PPOs. We’re pondering ACOs, MLRs and CERs under Obamacare. Still awake? Good. Because it’s as if these acronyms were devised as sleep aids. It’s easy to lose track of the fact that actual lives are at stake.
The United States leads its peers in the number of preventable deaths per capita, according to a study in the August 2012 edition of Health Affairs. We also trail countries such as Germany, France and England in making improvements in this area. The study’s authors blame the lack of universal care. It sure isn’t for a lack of spending, because we kick butt in that category.
And so it goes with the Certificate of Need, which began in the Nixon administration as concerns began to mount about medical inflation. The idea was for government to ensure that there was actual demand for new facilities, because the prevailing view was that a saturation of services would be paid for either by filling beds with patients who didn’t need to be there or by raising prices. The feds gave up on this concept in the 1980s when they found that it failed to contain costs. But 36 states, including Washington, still require a certificate before construction is green-lighted.
In case you hadn’t noticed, health care costs are still running wild.
A 1999 certificate program audit by the state Joint Legislative Audit and Review Committee could not find clear evidence that it contained costs. However, the requirement is still popular among health care companies that hold a dominant position in a particular market because it can be used to keep out competitors.
That’s not to say competition would lower prices either, because there is plenty of evidence that this is false. In fact, the comprehensive Dartmouth Health Atlas shows wide regional variations in health costs, and often the areas with the most services also have the highest prices. Steven Brill, in his landmark Time magazine article, exposed incomprehensible price variations for identical procedures within the same communities.
So the certificates don’t work and neither does eliminating them. Why? Because like everything else we’ve tried, it masks the larger issue. We don’t have a coordinated, transparent health care system. We don’t know how much services and procedures cost, and neither does your doctor. At the same time, health care coverage isn’t like hamburgers. If you don’t buy a Big Mac, it won’t cost me anything. Still, we pretend market-oriented reforms or featherweight regulations are solutions.
They aren’t. They are a toe in the water when we need to do a big, fat cannonball.
You know how to lower prices? By lowering them. Government should set prices by recouping the actual cost of services and investments, and allowing providers to make a comfortable living. This is how it’s done in Germany, France, England, Canada or any modern nation you can think of. Except ours. We keep the free-market fiction on life support while failing to prevent deaths.
So in the grand scheme, it doesn’t really matter who wins that tussle in the Valley, because it won’t make a big enough splash.
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