Who's really paying?
Your cover story "Battle of the cost reports" (Oct. 28, p. 6) on the national Blues association study fails to distinguish between cost to the provider and cost to the payer.
Although it is true that provider costs for technology, staff, pharmaceuticals and insurance have been going up dramatically, these cost increases are not simply passed on to payers.
The simple fact is that health system costs have gone up much more rapidly than health system reimbursement. The Blues can't validly blame providers for their cost increases because the Blues plans aren't covering hospitals' cost increases. My health system is seeing cost increases of more than double our reimbursement increases.
While I agree that we all have a stake in bringing down costs, I don't find it useful for one component of the health system-a payer-to spend lots of time and money showing how it can blame providers for the problem we all need to share.
President, chief executive officer
Valley Health System
Todd Sloane's Nov. 4 editorial on rising healthcare costs "It's everyone's problem" (p. 28) was well-stated. Every participant in the healthcare decisionmaking process wants to point the finger at someone else. Every study can be interpreted to the benefit of those supporting its results.
The time has come to engage in meaningful discussion about changing how we treat the health behaviors of the American people. Until we stop continuing to treat only the symptoms of the problem, no reform or reimbursement or regulatory changes will be enough to stop the rise in healthcare costs.
President, chief executive officer
Paying for performance
Modern Healthcare has published several articles that mention pay-for-performance programs in which doctors can receive bonuses for controlling costs through improved quality of care. We at Medline Industries applaud these types of incentive programs and believe it is time to expand them to other areas of healthcare.
As stated in your article "Physicians can get bonuses" (Oct. 14, p. 18), performance incentives act as a scorecard to measure an individual's progress toward achieving specified goals. This is a noble goal and reflects our capitalist system, a major reason why the U.S. has the world's second-highest per-capita gross national product.
Despite the virtues of the pay-for-performance philosophy, in meeting with hospital administrative and management personnel around the country, I have learned that the vast majority of compensation is based on a fixed salary. Equally disturbing, most do not have specific quantitative or qualitative job performance goals that are measured on a regular basis. I believe, as is the case in most private businesses, financial rewards and scorecards that are rigorously monitored-resulting in a reward or penalty-have an impact on human behavior and productivity. Certainly other important organizational structures need to be in place to foster a positive work environment and healthy work ethic, but in the end, keeping score and rewarding performance will have the biggest impact on productivity.
The purpose of my letter is to encourage hospital administrations to adopt more pay-for-performance programs for themselves and their staff. If the direction is to improve quality of care, reduce cost and improve productivity (which I believe are most hospitals' chief objectives), financial incentives will motivate employees more effectively to attain those goals than any other inducement. It is also crucial that to achieve maximum performance, the goals be tied as closely as possible to an individual's job responsibilities. In other words, rewarding an individual based on achieving the global objectives of an entire organization (such as company sales) will not have nearly the impact on behavior as recognizing those that relate directly to that person's specific day-to-day activities.
In the past few years, hospitals have made some great strides to maximize cost efficiency. Implementing more pay-for-performance compensation programs will help to further this process.
Senior vice president of corporate sales
I was pleased to read your Oct. 28 special report "A new landlord" (p. 42) on the enormous transfer of healthcare real estate assets from hospitals and health systems to third-party real estate developers and investors.
As a healthcare real estate developer and owner, I want to elucidate what's motivating entrepreneurial real estate firms to pay top dollar for medical office buildings, outpatient treatment facilities and the like. The article cites a service provider and a doctor in support of the notion that developers are focused on the bottom line and "are going to raise rents aggressively." The article quotes a physician who relates that a "hospital had a vested interest in working with (doctors) on any problems. When you bring in private business, it changes the environment."
I believe developers are acutely aware of the complex network of relationships that is crucial to the provision of healthcare, principally that between doctors and hospitals. Furthermore, the sophisticated healthcare developers/owners of today do indeed have a deeply vested interest in fostering relationships with their physician tenants. A happy tenant base invites new business in the form of expansions to existing facilities and new construction. What developers ultimately seek is to align themselves with major health systems for the long term to service all their real estate needs, and the easiest way to do that is to demonstrate a commitment to best practices such as professional-grade management services, timely improvements to mature buildings, lower operating costs and reasonable rental rates for doctors.