Healthcare: Redesign Required Hospitals – Phase One?

“A lot of hospitals have what I would call an edifice complex… All they want to do is build buildings.” 

Dr. Bruce Leff, a faculty member at Johns Hopkins for 25 years 

In this time of COVID-19, ask yourself how comfortable you feel, if you require treatment or surgery, with full hospitalization. Feel safe? And if you have ever been hospitalized, even in hospitals affiliated with a religious organization or those nominally defined as “non-profit,” what do you see when you get an itemized printout of services and medications provided? You may not examine the numbers if you are well covered with health insurance, noting that most carriers have seriously reduced pre-negotiated prices that you cannot get if you are an individual payor, but the costs far exceed staying in most five-hotel luxury suites. 

Just walking down the corridors of any major hospital, the cost-causes are obvious and massive – looking at the signs, the large dedicated sections of the building dedicated to incredibly expensive diagnostic and treatment-directed technology, operating theaters with ultraviolet cleaning systems, emergency equipment, monitors, oxygen and anesthetic systems. Computer systems everywhere. Expertise around every corner. Administrative staff and facilities to handle vendors, billings, payroll, etc. Add to that the real estate, from parking lots to the main buildings sporting the names of mega-rich donors insuring that they get extraordinary care if they or their families require hospital care. Multiple buildings. Money talks. Actually, it screams.

As our government chooses to deny ubiquitous access to healthcare, a right in the rest of the developed world (and much of the developing world as well), routine visits for check-ups and minor complaints, the stuff of family physicians, medical issues for those without coverage are automatically shunted to hospital emergency rooms. Profoundly expensive. Profoundly wasteful. But after all, in the United States, healthcare is a privilege until you are qualified for Medicare, which hardly covers what seniors really need across the board. No eyecare, no dental, no vision care, and lots of holes and missing pieces. 

Hospitals are not allowed to deny admission to people in dire need, but absent the applicability of Medicaid (not uniform since many red states refused to expand coverage), payment of the resulting invoice is the obligation of the individual admitted. Lots of medical bankruptcies, which leave hospitals with a need to raise rates for everyone else to cover these losses. We know that the only cure for most of this is full universal healthcare, which is not on any candidate’s agenda. Biden wants to expand Obamacare (the ACA) to cover more people, and, despite a pledge to produce a new healthcare plan that never happens (and has no serious GOP support), Trump is trying to extinguish ACA completely, an issue before the US Supreme Court.

Clearly, we are misusing expensive hospitals. This pushes costs up, up and away, making the average cost of medical care in the United States close to double what it is in Western democracies under their universal care systems. We pay absurd amounts more than those nations for prescription drugs, often multiples of the average costs outside the US. Obviously, there are vastly better ways to do… well… just about everything. For those who tell you that we have the best healthcare system on earth, that is true only for the rich or those with the highest levels of premium health insurance provided by high-end employers or unions with powerful negotiating power. The rest of us face mediocrity or less.

Do we really need to shunt so much healthcare directly into these monolithic mega-structures we call “hospitals”? The answer is a resounding “no!” We still have to get over rules and restrictions aimed at maintaining the status quo, but the time for change is… er… yesterday.  “Doctor Bruce Leff… argues that hospitals don’t have their priorities straight…  ‘A lot of the money that rolls into hospitals goes to cover the fixed costs of maintaining those buildings,’ he says.

“Shifting the finances back toward the patient has been Leff’s goal since the 1990s, when he began pushing for hospitals in the United States to consider a concept known as ‘hospital at home.’ Common in Australia and pretty much what it sounds like, hospital at home enables some healthcare services to be provided to patients directly in their homes, freeing up hospital beds for more serious conditions and bringing down the overall cost of care. ‘You’re not using the dollar to pay rent. You’re not using the dollar to finance the hospital bonds that went into buying the building,’ Leff says. ‘You’re actually using the dollar to provide patient care.’

“That approach is becoming increasingly appealing to healthcare systems. An estimated $3.6 trillion is spent annually on healthcare in the U.S., and more than $1 trillion of that goes to cover hospital care. Seeing room to bring that cost down and reap the profits, several hospital-at-home startups are now bringing this model to markets and patients across the country. They could revolutionize how hospitals provide care, and where.

“Twelve years ago, Raphael Rakowski was preparing to take a seat on the board of an academic medical center when his elderly father became ill and needed to be hospitalized. He ended up at the very medical center Rakowski was about to join. Sitting in his father’s hospital room, Rakowski, an entrepreneur with more than two decades of experience in healthcare, began a diary tracking the medical care being provided and the hospital’s workings—a kind of user’s perspective of the hospital he was going to help advise.

“Then something happened. A mistake was made—a medical error—and Rakowski’s father died. The sudden shock led Rakowski to look more deeply at the hospital and how it worked. One of his discoveries was that 68% of the cost of delivering care there went to brick-and-mortar overhead. ‘That led me immediately to the conclusion that 32% of the cost of care is inadequate to care for someone in an acute episode,’ he says. ‘I became obsessed with this idea of a bricks-and-mortar tax on services.’ He set out to get rid of that tax and learned about emerging hospital-at-home efforts being attempted by people such as Bruce Leff. Rakowski says he and a business partner, Rami Karjian, stayed up for two days drinking Diet Coke and making a list of all the problems they’d have to solve for hospital-at-home to work. They came up with 188. ‘Regulatory, structural, operational, clinical, legal, financial. There was no shortage of things that got in the way,’ he says. Gradually, though, he says they figured out how to address many of these barriers and launched a company now known as Medically Home, based in Boston, which uses technology to bring doctors, nurses, and medical equipment to patients’ homes, both physically and virtually.

“All he had to do was get hospitals on board. ‘I started going on a marched mission to convince hospitals to take patients out of their own hospitals, to care for them at home,’ he says. ‘And of course they’re in the business of putting heads on beds and not in the business of discharging patients, so it was a very, very lonely, expensive, and time-consuming effort to get thrown out of some very famous health systems.’

“But as technology improved, two-way video calls, remote monitoring of patient vital signs, and easily portable medical equipment such as electrocardiogram machines made it possible to provide more care more reliably in peoples’ homes. Patients who’d otherwise be admitted to the hospital for pneumonia or low blood flow related to congestive heart conditions or an infected wound can now be treated directly in their homes.

“Medically Home is working with healthcare systems in five states and will soon be expanding into two more. It’s recently partnered with the Mayo Clinic and is now operating in two of its markets, in Florida and Northwest Wisconsin. Using Medically Home’s technology, the Mayo Clinic can have its doctors make scheduled virtual rounds via video connections in patient homes, where a nurse or contracted paramedic is standing by to administer intravenous fluids or otherwise be the doctor’s hands. Vital signs are streamed directly to the doctor’s control center, and Medically Home’s software coordinates the delivery of medication or the scheduling of visits by specialists such as physical therapists. Unless the patient’s condition worsens to the point of needing to go to an ICU, nurses and other practitioners administer care based on the orders of the doctor. In the majority of cases, the doctor can guide treatment without leaving their office…

“A key piece of Medically Home’s model—and the model of other companies providing hospital-at-home services—is getting personnel, services, and equipment to patients as efficiently as if they were inside the walls of a hospital. Paramedic services are one solution. ‘We have paramedics everywhere in the country, and they’re dispatchable rapidly,’ says Rakowski.

“That’s the basis of another hospital-at-home startup, DispatchHealth. Based in Denver, the company operates hundreds of paramedic-style vehicles with on-call remote medical professionals ready to provide both emergency and ongoing care to patients in cities such as Seattle, Phoenix, Las Vegas, and smaller markets like Springfield, Massachusetts, and Spokane, Washington. In partnership with local hospitals and health systems, the vehicles can arrive at a patient’s home within an hour, carrying a suitcase-sized ‘moderate complexity lab’ capable of running blood tests, administering fluids or medication through an IV, treating shortness of breath, arranging for x-rays, ultrasounds, and EKGs— ‘basically everything in the ER, short of a CAT scanner, an MRI, and certain higher-level procedures,’ says Dr. Mark Prather, the company’s founder and CEO.

“Prather would know. As an emergency room doctor with more than 25 years of experience, he’s seen the gamut of what comes into a hospital’s emergency department…. “For 60% of what walks into an emergency room, this is actually perfectly appropriate,” he says… There are significant potential savings in treating patients at home. Prather says the average ER visit costs between $1,000 and $2,000. A little bit of that is the physician’s fee, and a lot of it is what we call the facility fee, or what the hospital charges. So if we could do this care for a couple hundred dollars, which is essentially what we charge, we could save five to six times on every single case,’ he says…

“But the hospital at home model still has one main hurdle: reimbursement from Medicare and Medicaid. As of 2017, 58 million people in the U.S. are enrolled in Medicare and Medicaid, but those systems don’t currently have any way to fully reimburse healthcare systems for services provided in patient homes. Patients in the Medicare Advantage program and those covered by private insurance can often qualify for their hospital at home care to be reimbursed, but that still leaves a large chunk of the market—older Americans—out of luck.

“‘You have 65% to 70% of Medicare-eligible patients not able to access the hospital at home program, and those are typically the ones that could benefit most from this model,’ says Travis Messina, cofounder and CEO of Contessa Health.” Nate Berg writing for the September 8th FastCompany.com. And yes, there is a new generation of very portable x-ray equipment rising fast.

This tumultuous reality is the product of a healthcare system that just evolved, seldom with any central plan. Our starting point on costs, compared with the rest of the developed world, emanated from post-WWII realities. Our cities and infrastructure were hardly touched by the war, as so many other nations had to deploy money toward rebuilding. We built a consumer economy instead, with high growth industries and powerful unions pushing prices and salaries far above the rest of the world. And the cost of medical care. 

Well, we are all in the same economic boat these days, and we have to undo the bad habits of the past to evolve a medical system that actually works for most of us. Just think how much less COVID would have spread if groups of underpaid workers had had doctors to go to in the beginning. As late October showed the pandemic enter its second wave, with new US cases accelerating to the highest levels seen to date, the very future of generally available care is at stake.

I’m Peter Dekom, and myopic desires to “save taxpayer money” often result in vastly higher costs that far exceed that attempt to cut taxes… and are still carried by “everybody” anyway.