Businesses are exploring sending employees overseas for health care procedures to save money. A fraction, 500,000 of the almost 47 million uninsured, went overseas for treatment. That equates to just over 1% of the uninsured who have the resources to afford travel costs, time off from work and cost of treatment (unless they are going to a country that has a national health system).
The promotion of overseas care to save money strikes me as odd, especially given America’s ban on imported medicines from our neighbors to the north or south due to quality control reasons. If international competition is a viable strategy to reduce medical costs one might think drugs would be included.
The President’s health care plans rely on competition. Health insurers will compete with each other on price and service (the model for Medicare Prescription Drug program). Hospitals and doctors will compete with one another on price as individuals shop around for health care. Under the Bush health care strategy, the nearly 3 million people covered by high deductible health plans will flip behavior in a market of 300 million people. Only 1.2 million have funded health savings accounts with which to pay tax deductible money on those negotiated prices. When was the last time 1% or less of a market flipped prices?
Just yesterday I listened to Triad Hospitals earnings conference call and then perused some of their prior investor presentations. One slide showed hospital prices to be inelastic which means they don’t vary with demand. The company can raise prices with little impact on volume. Triad’s revenue rose 6% the last quarter from price increases alone.
Their strategy is to gain sufficient presence in a market to get better contract pricing from payers. My hometown of San Angelo, Texas is ground zero for this strategy. Just two weeks ago our longtime nonprofit community hospital system, anchored by Shannon Medical Center, announced it would sell out by joining with the local Triad facility in a new for profit joint venture. In the investors Q & A CEO Denny Shelton called the merger “an incredible opportunity on a significant consolidation play in that market”. He stressed “Together we can make it; apart we might be killing each other.” The corporate chief announced that such consolidation gives the company greater leverage in negotiating contracts with insurers.
Our community has 28% of the population without health insurance. Triad made it clear in their conference call with analysts their plans to control bad debts by managing self pay patient accounts better. One strategy is to educate physicians on elective and non emergency care for the uninsured. They plan to implement a credit scoring system to identify patients who can afford to pay. From the conference call it is clear Triad has a plan to manage self pay patients and their corresponding bad debts.
Taking the national figures to our local level of 28,000 uninsured, some 280 might already travel overseas for care. This leaves 27,720 people needing care domestically. Triad will provide emergency care regardless of insurance status for legal reasons. They also recognize their responsibility to do a bit more than the minimum when their facility is the only one in a community. However, they likely will not provide the amount of free care Shannon has historically given, especially as they embark on their bad debt management plans.
So what do the 27,720 people do for care? Will the Antitrust division of the Justice Department look at this issue? What will the Texas Department of Health do in their review? How will the county judge approach changing the will of J.M. and Margaret Shannon, the benefactors who established Shannon Medical Center via their final wishes that those without resources have a place to be treated?
The Triad CEO stated some nonprofit hospitals approached his company as foundation resources supporting the institution had been depleted. Was he referring to the Shannon Trust? Is that why the Trust is doing the deal, to get a $46 million influx of cash? How will they put that money to work fulfilling the Shannon's final wishes? Will the Shannon Trust begin paying for those same folks to travel overseas for care? Will they take the $46 million from Triad and purchase a hospital in Thailand or India to serve the poor in San Angelo? The times they are a changing...
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