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Hospital Executive Worries About 'What-Ifs' of Health-Care Reform

"Coverage is only a vehicle to access, and if you don't improve access, we're not going to solve the problem," said Barnett, who moved to Seton from Fairfax Hospital 16 years ago. "If we don't address the supply problem, we'll get into the position where you just queue up."

The Obama administration says there is significant waste in hospital care and that costs must be curbed. Reformers hope competition will lower fees and that new incentives will prod and inspire hospitals and doctors to work better together. "That can lead to greater efficiencies and potentially could benefit both of them," said Paul B. Ginsberg, president of the nonpartisan Center for Studying Health Care Change.

To manage rising costs, many hospitals have been adapting already, introducing reforms consistent with the proposed legislation. At Seton, this includes call centers staffed by nurses to cut down on emergency room visits and protocols that reduce birth complications, saving money and beds.

Seton, a group of 10 hospitals and a network of community clinics, delivers a mix of care to a broad array of patients in an area with 1.7 million residents and 400,000 uninsured. It handles organ transplants and cancer treatment, while also running the former county public hospital. Two-thirds of the charity care in Central Texas is provided by Seton, the company reports.

"We know there are more people who are uninsured here than we have the capacity to serve," said Patricia A. Young Brown, Travis County Healthcare District executive. "The question is how much does reform reduce that need."

Current reform proposals would cover as many as 95 percent of Americans, a significant improvement. That suggests more money available to health-care providers and, if the theory holds, a healthier population that needs less care over time.

Yet when health-care specialists like Barnett look at the remaining uninsured, they see the part of the population least likely to take preventive measures and most likely to abuse their bodies or suffer a calamity and end up on a hospital doorstep, unable to pay the full tab.

Nowadays, one way governments help such hospitals meet their costs is through tax breaks. Another is a program that provides "disproportionate share" payments -- Seton has collected $48 million in the past four years to defray the costs of hospitals with a larger-than-average proportion of indigent patients.

Barnett and others say they fear those payments will be eliminated as part of the Washington changes. He said Seton has already allocated $29 million of its payments to expand community health centers and increase treatment options, the sort of innovation the Obama administration considers essential.

Seton researchers studied 7,410 patients whose treatment cost an average of $2,645 more than the hospitals collected, or about $20 million in a year. The researchers said members came from identifiable groups -- homeless, disabled or mentally ill people and substance abusers. Many are in their early 60s, not quite old enough for Medicare.

"We're still going to be carrying a burden of providing coverage for them," Barnett said, adding that he, considers it unlikely that many such patients will get and keep any kind of insurance.

The nine patients who made 2,678 emergency room visits to Travis County hospitals in six years fall into that category, according to a study by the Integrated Care Collaboration, which said seven of them had a mental illness, eight abused alcohol or drugs and three were homeless.

Barnett favors national catastrophic insurance for vulnerable patients. The policies would be designed to rescue safety-net hospitals and rehabilitation centers that often become places of first and last resort.

Seton, which belongs to Ascension Health, the nation's largest nonprofit health system, is economically stable, in contrast to some big-city and rural hospitals. Its children's hospital opened in 2007 with the help of $86 million in contributions. The system paid for two new hospitals without borrowing, justifying the use of cash reserves because of rising need. The area's population is projected to grow nearly 60 percent to 2.7 million by 2020.

To reduce costs, Seton spends $1.5 million a year to operate a call center where nurses ask questions and recommend a course of action. One recent month, nurses did telephone assessments of 2,987 callers and reduced emergency room trips by 12.1 percent from the monthly average. By Seton's estimate, the center saves as much as $10 for every $1 it costs.

On another front, Seton cut down significantly on birth trauma by changing protocols. The shift lowered the number of birth injuries and the average length of stay from 15.8 days to 3.4 days. The hospital's costs for birth complications fell from $1.7 million in 2001 to $19,591 in 2007, while the amounts billed dropped from $4.5 million to $66,000.

Barnett is the first to assert that hospitals can find efficiencies, but he said decisions made on Capitol Hill this autumn will say much about the industry's future success and solvency. Beyond the fears he cited, he said he worries about changes not yet devised or understood.

Margins are so fragile in health care," Barnett said, "that small, negative, unintended consequences can have a dramatic impact."

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