More hospital rate increases are business and jobs killer

July 5, 2011
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As the first half of 2011 closed, the 6th U.S. Circuit Court of Appeals three-judge panel affirmed that Congress can require Americans to have minimum insurance coverage, often referred to by detractors as Obama Care. It is the first of three opinions awaited since May and June testimony began in three separate courts of appeal.

The regional business community can do little more than wait as the appeal process continues, most likely through eventual deliberation by the U.S. Supreme Court, but there is much business owners can affect on the regional level.

On July 1, Spectrum Health initiated its second consecutive (average) 8 percent increase in cost of services, well above the rate of inflation. Spectrum’s rate increase was indicated in mid-spring during its annual community meeting, during which time the health system reviews annual revenue projections and planning. Spectrum expects that with the increase, its operating revenue will be approximately $4.1 billion, a 12.4 percent increase of its 2011 estimate of $3.6 billion. (See story on page 16.)

Saint Mary’s Health Care and Metro Health both are expected to raise rates, as well.

Business owners have endured more than a decade of such price increases, often in double digits, which are reflected in health care insurance rates as employer-sponsored care plans come due for renewal — and many have not planned for yet more high increases.

The difficulty of negotiation to find “competitive” pricing is negated by the fact that Spectrum now owns Michigan Medical PC and West Michigan Heart, and the member physicians in many respects were bound to agree to privileges at Spectrum … only.

Business owners must be concerned in regard to any one entity creating a “capture” of medical services and have local examples of why “free enterprise” cannot be overlaid in the health care arena. Most recently, Spectrum attempted a “bear hug” of Mary Free Bed Rehabilitation Hospital, by which it would own the 120-year-old nationally respected facility, giving privileges, again, to Spectrum physicians while charging those from Metro or Saints additional fees and giving them lower priority.

As reported in the story on page 1, Mary Free Bed elected instead to declare its independence and strengthen its ties to other state and national regions. Spectrum then deigned to create its own rehabilitation services on the Blodgett campus — a serious duplication of area health care services, and at a cost inflated by recruitment of another team of specialists and duplication of all appropriate technology. Spectrum is in the midst of that construction at Blodgett, and will “compete” with Mary Free Bed, little more than one mile away.

Business owners and employees will pay for it.

The Alliance for Health, a community and business leadership-based agency charged with oversight in regard to duplication and cost (and established long before President Ronald Reagan created Health Systems Agencies), has over and again this year monitored the activity and repeatedly warned of its impact on the local economy.

Alliance President and CEO Lody Zwarensteyn told the Business Journal, “One thing they have to be careful of is killing the goose that laid the golden egg — that is the private side of consumption in health care. You cannot keep piling it on and piling it on and just assume that it is no greater expense. When the service industry takes money from the productive areas, manufacturing and so on, you’re forcing jobs out of the region.”

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