Bed check: Sharpen the instruments of health care cost containment
In the not-so-distant past, consumers blissfully were unaware of the continuing escalation of the price of health care, but the Grand Rapids business community was moved to action by more than a decade of escalating costs for insured employees. In Business Journal surveys, it remained the No. 1 issue among regional employers for 12 consecutive years, as costs continued to arch from 12 to 17 percent of the national GDP. It appears imminent many government-mandated initiatives in the Patient Protection and Affordable Care Act will be overhauled, and the Business Journal is mindful of Reagan administration initiatives that addressed some of the systemic causes of cost increases, and the tremendous effort the Grand Rapids business community gave to those methods of controlling costs. A partnership of large and small business owners and all area health care institutions were able to create a system of balances that became a model across the nation. It should not be forgotten in the race to repair government regulation: Such cost constraints in the system of health care provision can abate or reduce the cost overall, no matter how consumers attain insurance — or don’t.
One of the central tools used by business leader cost watchdogs measured statistical areas and gave oversight to overbuilding and over bedding an area. The more beds any one hospital needed to pay for could only be divided by the number of users; 100 users pay less than 10 users. It also posed fundamental questions in the technology buildup. In an oversimplified example, if PET scans are available in a facility every 10 blocks but used by just 10 people in total, costs skyrocket.
It is notable the 2017 West Michigan Healthcare Economic Forecast showed outpatient care (in comparison to other regions) ranked the Grand Rapids area well above national levels and doubled since 2003. It may not be coincidence the number of outpatient clinics built by health systems, sometimes one across the street from another, has been comparatively prolific in the same time period. Are there more users or are health systems trying to pay for the beds, and is the system overbuilt? Such has been the root of concern in Grand Haven, where Spectrum Health is building a $50 million Health Pointe despite Grand Haven’s North Ottawa Community Health System, now each paying for care for an unchanged population of patients, who will obviously pay a higher price.
The Grand Rapids business community has provided some key cost oversight which may again beg need for such involvement. Michigan’s Certificate of Need process also provides business — and the government — opportunity for such oversight to prevent the continued spiral of systemic causes of health care inflation.
It’s time to sharpen the instruments of cost containment.