Uncomfortable growth

An editorial in today's Globe raises questions of several types with regard to a plan by Massachusetts General Hospital to expand its emergency department, surgical facilities, and beds. Charlie Baker, CEO of Harvard Pilgrim Health Care, also raises a number of issues on his blog.

I had trouble knowing what lessons to draw from this commentary. I understand the authors' concerns about the cost of new hospital facilities, but rest assured, no one in the hospital business builds expensive new space unless there is a reasonable assurance of the demand being there to use it.

Here are the trends we see. Even if population growth in Massachusetts is minimal or flat for the coming decade, demand for the services of tertiary hospitals is likely to grow. Why? As the baby boomers age beyond 50, they have an increasing demand for hospital services. In addition, their parents are living longer than ever, and they, too, are heavy users of hospitals. Not only are both groups displaying greater utilization of hospitals, but their ailments are of greater acuity, resulting in an increased demand for tertiary care. (And by the way, if the people in the younger generation do not change their ways with regard to weight control, they will be in the hospitals also for care of diabetes-related health problems like vascular and heart disease.)

While I have not asked the folks at Partners Healthcare about this, I am guessing it is this demographic wave that leads MGH and Brigham and Women's Hospital to plan expansion of tertiary care facilities. The same is true for BIDMC.

I know people get uncomfortable with an additional aspect of the issue: There is also a business imperative for this kind of construction. The insurance reimbursement system rewards increases in volume, especially high-end procedures and surgery. It does not reward preventative care, nor cognitive specialties in which doctors examine you and then make judgements about paths of care. It does not, in particular, provide sufficient income to primary care doctors to spend the extra time with patients that might avoid hospitalization.

So if you are running an academic medical center and you would like to be financially healthy to sustain and enhance your tri-partite mission of clinical care, research, and teaching, your business plan is simple: Grow, and expand your tertiary lines of care in particular. If you stand still, the inflationary costs affecting your hospital will soon outstrip your revenues.

Gee, in this regard, hospitals are not all that different from other businesses. After all, who would complain if any corporation decided to expand capacity in its more profitable lines of business in anticipation of increased customer demand?

But hospitals are different in that they do not sell directly to the public and are not judged every day on the quality of their service. The intermediaries in this field -- insurance companies, the federal and state government, and employers -- mask the costs of health care that you or I actually use. And, there is virtually no way for a consumer to compare the actual quality of care delivered by hospitals: Almost all the publicly available data is out of date, based on administrative rather than clinical information, and embedded in hopelessly confusing websites. So there is really no market-based set of checks and balances on hospitals of the sort faced by other types of corporations.

I fear all this is leading to an unsustainable situation and that the academic medical centers are the ones that will feel the public's wrath once that is apparent. Why? Because we are the high-cost part of the health care system. There are legitimate reasons for that, which we could discuss at another time. But those reasons will not hold sway when the bill to employers, subscribers, and taxpayers gets just too high to pay.

To me, the remedy is clear. AMCs have to become the places that set the standard for quality improvement and cost efficiencies. They need to demonstrate that their value to society goes beyond the clinical care, research, and teaching they offer. On the quality side, they need to establish the science of care as an academic discipline that informs health care providers everywhere. On the cost side, they need to engage and adapt principles of organizational efficiency from other industries to make a structural change in their production model. Meanwhile, insurers and government payers have to support both components of the solution by rewarding hospitals that improve quality and reduce costs.