Over the next few years, tens of millions of baby boomers will start to enter their 60s. The generation from the “me decade,” first convinced that they were going to change the world, has now been convinced by advertising that the least they can expect is that the world won’t change them. Prescription drugs these days promise an end to arthritis suffering, erectile dysfunction and a whole host of other conditions brought on by age. Doctors throughout the country say their patients these days aren’t willing to accept this slow encroachment on their health. They want the latest, most expensive tests and drugs to assure them symptoms, if not illnesses, are a thing of the past. The cost of these drugs and tests are contributing, along with factors like the millions of people in California and across the country without any insurance at all, to a crisis in the U.S. health care delivery system. Hospitals spend millions of dollars on the newest medical technologies in order to attract doctors to their staffs at the same time they’re treating thousands of ill patients who can’t cover the cost of a visit to the doctor, making it too expensive for some hospitals to keep emergency departments open. Health plans are spending more money than they ever dreamed to care for a population whose life span has almost doubled in 100 years. If these causes aren’t first-hand knowledge for business owners and workers, their effects certainly are. Every year human resources managers have to let employees know that they’re going to have to get used to paying more in order to keep themselves and their families healthy. Every year, larger salary portions are covering higher premiums that businesses either cannot afford or are not willing to shoulder on their own. Jim Lott, executive vice president of the Hospital Association of Southern California, says there’s no reason to expect those costs to drop any time soon. “Our hospitals are full these days. Most hospitals in the San Fernando Valley are running at 90 percent occupancy, five years ago it was 75 percent. If you look at the baby boomer population coming of age, there’s going to be more hospitalization needed by that age group and an increased use of pharmaceuticals,” said Lott. The cost of labor at local hospitals is increasing at about three times the normal rate of inflation every year, he added, since nurses and other skilled health professionals are in short supply. “In all fields where specialized health care labor is required, the law of supply and demand works against holding costs down. There’s greater demand for more allied health professionals like nurses, who provide a preponderance of care in hospitals,” Lott said. “We’re paying nurses that come out of two-year college programs $60,000 to start.” Mike Wall, president of Northridge Hospital Medical Center, agrees that labor challenges are a constant struggle within local hospitals. “There is an acute shortage of nurses, pharmacists, radiology technicians. Then we’ve got increased costs in providing services,” said Wall. “Salary costs have gone up, benefits costs have gone up. This is a very labor intensive business, 60 percent of our budget goes to labor costs.” Keeping employees happy Hospitals that are unable to fill their staffing needs are forced to rely on traveling professionals, especially to fill nursing positions. Those hospitals can expect to pay millions of dollars every year in order to fill those positions. To keep gaps from opening, however, Wall says that hospitals have to work hard to make employees happy. Northridge has a mentoring program for its nurses, pairing up newer employees with more experienced peers so that nurses don’t feel overwhelmed. “Employee turnover, which can be very costly if it’s in the higher percentages, is in the single digits (at Northridge) now,” said Wall. “We’re getting a reputation as a place where people like to work. With 1.8 million people in a 28 mile radius, people in health care who have friends and neighbors that work at a different place, and we’re developing a reputation as a good place to work, a place that invests in employees and rewards them.” While it’s hard to make some cuts in the services it offers, the hospital is choosing to invest in technology that will attract quality physicians who will in turn bring their patients. Later this month Northridge’s gamma knife, a device that uses laser beams to treat brain tumors with pinpoint accuracy, will be used for the first time. Although the machine costs $4 million, Wall says it has the potential to bring plenty of patients since Northridge is the only hospital in the Valley to have one of the machines. Other hospitals have their own revenue generating specialties: Encino Tarzana Regional Medical Center operates a very highly regarded heart treatment center and Sherman Oaks Hospital works with one of the nation’s leading burn centers, the Grossman Burn Center. But it’s not enough to cover the losses from treating uninsured patients. Problem of the uninsured Health care industry experts, government representatives and others agree that until the state finds a way to dramatically reduce the number of people living without any kind of health coverage, costs for employers and workers are going to continue to rise unchecked. But even if there were an abundance of nurses in Los Angeles, Lott says our hospitals would still be in the same positions. “All hospitals with emergency rooms have to take all comers regardless of their ability to pay,” Lott said. “Unfortunately, in our local society, one out of every three people has no insurance coverage. We eat that cost. We try to shift some of those costs to paying patients, so you’ve got continued pressure to increase charges to pay for the care of people who use the hospital and don’t pay.” Hospitals can’t collect every bill they send to an uninsured patient, so they end up have to take some losses. Private health plans try to avoid paying for uninsured patients, but they still end up picking up some of the tab and passing it along to businesses and individuals. “An effective strategy would be to address if not resolve that issue,” Lott added. “Once you have some sort of system of universal coverage, then you would talk about channeling people into more appropriate low cost venues. Half of the people that show up in emergency rooms don’t need to be there.” The problem, Lott says, is that people without insurance start to think of emergency rooms as their only option, or conditions worsen without attention from a primary care physician. Either way, the outcome is the same. The patient ends up with thousands of dollars in bills that he usually can’t pay, and hospitals are forced to try to find the money somewhere in order to stay afloat. Efforts from the governor’s office and various senators and assemblymembers at stemming the rising tide have grabbed headlines, but so far none of them seems like the solution. Gov. Schwarzenegger’s plan to reduce the cost of prescription drugs, which would have relied on voluntary discounts from the drug giants, never made its way out of the legislature. His office may now try to hammer out a compromise with Assemblyman Dario Frommer (D-Glendale), who has been working on a discount plan that would allow some state departments to get discounts by buying in bulk. Assemblyman Keith Richman (R-Northridge) and Senator Sheila Kuehl (D-Santa Monica) are both pushing plans that would in theory see everyone in the state insured. Richman’s plan would require each individual to carry health coverage by law, and would set up purchasing pools throughout the state to make coverage affordable. Kuehl’s plan, on other hand, would be a form of government-run healthcare a state agency would cover every resident. Neither plan is without its critics. Opponents of Richman’s plan say cost savings would be hard to guarantee, and critics of Kuehl’s plan say the government would soon begin “rationing care” in order to save money. Perhaps a more realistic goal, experts say, would be to cover every child in the state by expanding public programs like Healthy Families and other public programs. “We have to look over time at how we’re going to be able to provide basic coverage,” Wall said. “I’m not advocating a single-payer plan here, but we need some way to provide basic health insurance. . .we’ve got almost 50 percent of hospitals that are in the red.” Specialty hospital Northridge has been able to avoid some of the financial problems that plague other hospitals, Wall said, partly because it is one of two trauma centers in the Valley, and because it receives good reimbursement rates from private insurance companies because it is one of the largest specialty hospitals in the area. Admittance at the hospital has also gone up in recent years, partly because of the closure of Granada Hills Community Hospital 18 months ago sent more patients to nearby Northridge. But other hospitals say they need more from private insurers just to keep emergency room doors open. Health plans, however, discourage hospitals from thinking of them as their financial safety. Private health plans Blue Cross of California, WellPoint, Kaiser Permanente and others, say they can’t foot all of the bills for struggling hospitals. “Historically, government payers, Medicare in particular, used to have the deep pockets with large amounts of revenue,” said Michael Chee, spokesman for Blue Cross. “That changed dramatically when federal Medicare laws changed and the reimbursements were reduced. The same thing happened on the MediCal (the plan that pays for low income residents) side, and at the same time, the number of uninsured people has been climbing.” Hospitals were able to tip the scales in their favor for a while in the early 1980s, said Chee. A wave of ownership consolidation at the time put hospitals in better bargaining positions, and reimbursement rates rose at faster clip. But health plans like Blue Cross, Chee said, are responsible only for the patients who pay for their coverage. So while hospitals may still be asking for extra money to pay for the uninsured patients that come through emergency department doors, they won’t get all of it from private insurers. Chee agreed with Lott and Wall in their assessment that unless there is an effort to insure the six million California residents currently living without any coverage, the industry is not going to improve. Up to two thirds of the state’s uninsured population may have access to some kind of coverage without even knowing it, Chee said. Those employers who think they can’t afford to pay to cover their employees are justified in their concern, said David Levinsohn, CEO of Sherman Oaks Hospital. “The uninsured have gone up enormously, and that’s not because people are poor. People have jobs, the health care premiums are so high that people can’t afford to buy (insurance),” Levinsohn said. Business owners, naturally thinking of their own interests, might be serving to solve their problem by biting the bullet and offering insurance. By letting employees go without, businesses are filling the state with patients that don’t seek any medical care until they’re forced into emergency rooms. Lott, Chee and others agree that whatever the method, it’s imperative to insure as many eligible residents as possible in order to keep health care costs from draining even more out of our economy.
