Healthcare in a Minute

By George W. Chapman

“Micro” Hospitals

Not that common yet in New York state, micro hospitals offer emergency care, surgery, lab and imaging services and are priced somewhere between urgent care centers and full scale hospitals. Micro-hospitals can treat more conditions than urgent care centers because they typically have about eight to 10 beds for observation and short stays. Most large hospital systems are establishing them in markets that cannot support a full scale hospital.

Hospital Affiliations

Most rural and smaller community hospitals are being encouraged to “affiliate” with larger hospital systems or face a slow lingering death in an increasingly competitive marketplace. Recently, Oneida Healthcare in Madison County announced an “affiliation” with the Bassett system, but Oneida retains its sovereign board and management. Without an actual merger, affiliations usually fail to achieve the necessary economies of scale when it comes to management, operating costs, market share and physician recruitment and retention. Without a total merger or full integration, most affiliations don’t last, have little to show and typically leave the smaller hospital worse off and in a poorer bargaining position.

Top Causes of Death in 2014

1) Heart disease, 23.4 percent (of all deaths). 2) cancer, 22.5 percent. 3) chronic lower respiratory disease, 5.6 percent. 4) accidents, 5.2 percent. 5) cerebrovascular disease, 5.1 percent. 6) Alzheimer’s, 3.6 percent. 7) diabetes mellitus, 2.9 percent. 8) flu and pneumonia, 2.1 percent. 9) nephritis, 1.8 percent, 10) suicide, 1.6 percent. The age-adjusted death rate of 725 deaths per 100,000 people is an all- time low.

Most Expensive Inpatient Conditions in 2015

Septicemia, $23.6 billion; osteoarthritis, $16.5 billion; live birth, $13.3 billion; complication from graft, implant or device, $12.4 billion; acute myocardial infarction, $12.1 billion. Three years ago the top five was the same but expenses related to septicemia (bacterial blood infection) was $3 billion less.

ACA Exchange Enrollment

As of March 31 about 11.1 million people purchased healthcare insurance on the exchange. 12.7 million people enrolled but 1.6 million lost coverage for failure to pay their premium. The 11.1 million is about 1 million more than the same time last year. The public exchanges remain an unpredictable and volatile market for some carriers. National insurers United and Humana are planning to pull out of the individual markets next year.

Inpatient OOP Costs Up

A study published in the Journal of American Medical Assn Internal Medicine magazine found that despite the reasonable annual increase in healthcare spending of 2.9 percent between 2009 and 2013, the out-of-pocket expenses for hospitalized consumers grew more than twice that rate. In order to keep premium costs down, employers have been shifting more of the cost of care to employees through higher deductibles and coinsurance. In the past, most of the out-of-pocket expenses were for non-inpatient visits and procedures. Since the vast majority of consumers will not be hospitalized in any given year, most probably overlook hospital benefits and coverages when considering a plan.

Overall Spending Down, But…

According to the Robert Wood Johnson Foundation, the ACA can take some credit for slowing down the annual increase in healthcare spending. The study says we could spend $2.6 trillion less this decade (2010-19) than originally projected prior to the passage of the ACA in 2006. Analysts attribute some of the slowdown to the recession that began in 2008. Before the passage of the ACA, trustees of the Medicare hospital fund predicted they would run out of money by next year. The fund is now projected to stretch through 2028. The historic battles between insurance companies and providers must end if there are to be meaningful decreases in costs and increases in value or outcome. More than just collaboration, there must be aligned incentives among insurers, hospitals, physicians and drug manufacturers.

Huge Fraud Bust

Last month, more than 300 physicians, nurses and other professionals across 36 federal districts were arrested by the Medicare Fraud Strike Force. They are accused of bilking Medicare for over $900 million in false claims.

Data Breaches Costly

The average data breach costs an organization an average of almost $4 million per incident per a study sponsored by IBM. The cost of a hospital breach is about $355 per record up $100 from 2013. The study found that slow responses to a breach resulted in much more damage to an organization.

Advanced Practice Clinicians

The debate about increasing the scope of practice for nurse practitioners and physician assistants continues. Advocates for increasing their scope of practice point to advanced technology, low malpractice experience and the projected physician shortage. Those opposed believe increasing the scope of practice will result in more mistakes, more unnecessary care (tests) and poorer quality of care. The scope of practice varies by state. Many states — like New York — still require a formal relationship with a physician while other states allow them to practice relatively independently. The scope of practice debate often gets political. While the AMA tends to be against expanding the scope of practice, virtually none of my hospital or physician clients that employ advanced practitioners are opposed to expanding their roles. According to a recent study published in the Annals of Internal Medicine, advanced practitioners were no more likely to order unnecessary care (lab, X-ray, drugs) than physicians.

George W. Chapman is a healthcare consultant who works with hospitals and medical groups. He operates GW Chapman Consulting based in Syracuse. Email him at

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