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Hospital Executives Worry About the 'What-Ifs' of Reform

Some See Pluses While Others Fear Mandates

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Washington Post Staff Writer
Sunday, August 30, 2009

AUSTIN -- Charles J. Barnett's fears about a federal health-care overhaul are outrunning his hopes.

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From his perch as the chief executive of a nonprofit hospital network that draws patients from 11 counties in central Texas, Barnett sees plenty of problems in desperate need of fixing, especially in a state with a higher proportion of uninsured -- nearly one in four -- than any in the country. He has hopes for reform, particularly a larger pool of insured customers.

But then the what-ifs take over.

What if new policies reduce revenue and increase demand? What if existing doctor shortages grow worse? What if some of the most vulnerable and expensive patients continue to have no coverage, like the nine people who made 2,678 visits to local emergency rooms in one six-year stretch and soaked up $3 million in expenses?

And those are just his concerns growing out of the Washington policy proposals that he knows about. Given the scale of the overhaul the Obama administration seeks, Barnett predicts "there will be new vulnerabilities inside whatever changes get made," adding: "I don't think it's anyone's intention. It's just inevitable."

Anxiety is running high among hospital executives as they ponder the ever-changing proposals on Capitol Hill. Wary of changes to payment formulas and fiercely protective of their franchise, industry groups are spending millions to lobby Congress. They also pledged $155 billion in Medicare and Medicaid savings in a deal with the White House in hopes of avoiding a deeper restructuring that could cost them more.

"Any savings beyond this agreed-to amount would harm hospitals' ability to provide the care their communities need," the American Hospital Association said in talking points to members, including nearly 5,000 hospitals and health networks. The document noted "serious concerns" about House legislation that includes a government-run plan competing with private insurance.

Worries vary, and some institutions expect to gain more than they lose. "Safety-net" hospitals, which treat high percentages of patients with little or no insurance, anticipate more revenue if coverage is extended to 95 percent or more of the U.S. population.

The ability to provide care for the uninsured "improves dramatically with them having an insurance mechanism," said Alan Channing, chief executive of Chicago's Mount Sinai Hospital, which serves a largely impoverished population. After all, he said, the hospital is seeing most of those patients anyway and collecting little.

Even for the roughly one in six U.S. hospitals considered safety-net facilities, uncertainties remain, particularly in funding formulas. For hospital systems, such as the 11,000-employee Seton Family of Hospitals run by Barnett, the complexities multiply. Barnett said Seton executives are particularly troubled by a potential public insurance option that might pay rates comparable to Medicare.

Such a plan "would compromise the sustainability of Seton and most hospitals in the United States" by limiting their revenue, he contends. Further, if lawmakers say that hospitals and doctors may opt out of the public option, he says, the system would fracture: Access to "boutique hospitals and physicians" would improve and lines would lengthen at places that accept public insurance.

The mere act of providing coverage to more people would produce a new order of challenges in Travis County and its surrounding jurisdictions, where experts say doctors are in increasingly short supply. One in 10 Medicare patients already reports trouble finding a doctor, and Seton projects a shortage of 2,900 physicians in the 11-county region by 2020, even without adding people with new coverage.

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