Over the past few years, a number of D.C. hospitals have found themselves in trouble. Columbia Hospital for Women put itself in bankruptcy to prevent seizure, Georgetown and George Washington university hospitals posted tremendous losses and Greater Southeast filed for bankruptcy.
Competitive pressures to reduce cost and improve productivity will continue to produce turbulence in the local hospital market, and reductions in the federal Medicare payment under the Balanced Budget Act probably will bring more trouble to local hospitals in the next few years.
Therefore, the mayor's recent announcement of a commission to address the problem and strengthen the competitiveness of city hospitals is welcome. However, if the commission is to accomplish anything, its members will have to make some hard decisions.
The traditional responses to hospital instability typically include attempts to merge, more aggressive marketing, joint ventures or radical reductions in cost. Unfortunately, these strategies do not address the fundamental problem of excess capacity.
The District's hospitals have the capacity to serve twice as many people as they do because:
The city's population has decreased by about 115,000 since 1980.
The number of inpatient days has decreased by 185,000 since 1994.
Admissions have decreased by 17,000 since 1984, and inpatient surgery and births have decreased by the thousands in the past 10 years.
This problem of reduction in demand is compounded by:
The Medicaid payment to D.C. hospitals, which continues to be higher than the national and regional averages and thus a target for reduction by managed care.
The pressure by employers and government to reduce hospital payments; about 50 percent of the revenue for D.C. hospitals is from public sources and another 25 percent from managed care, all susceptible to further reductions.
These factors have resulted in many excess hospital beds across the District despite a voluntary reduction of 716 beds to 3,060 since 1994. Data from the American Hospital Association show that Washington has a higher-than-average use of hospital services and bed capacity and higher costs compared with the nation as a whole. The excess capacity of hospitals in the District probably would be even greater if better insurance and more community primary care services were available to more people to keep them out of hospitals. The city policy to expand insurance for the uninsured almost certainly will reduce hospital use.
The District has had many health care and hospital commissions that have studied problems in the local health system. Yet few have focused on root causes, and most of their recommendations have gone unimplemented.
The commission must avoid superficial solutions, such as attracting more business and reorganizing inpatient services. These strategies have failed consistently. Its work must focus on realistic solutions such as consolidating services, eliminating empty beds and closing hospitals. The government's role in this process should be to protect the poorest and sickest citizens by reorganizing the health system's framework. Therefore, the commission should review the status, resources and capacity of all hospitals in the District.
If the objective of the mayor's commission is to improve community benefit and service, it must identify real solutions to excess capacity. The alternative is to let market forces determine the final results.
-- Thomas Chapman
is CEO of HSC Foundation, which owns the Hospital for Sick Children and a health-maintenance organization for children on D.C. Medicaid.